Endowment compensation gross interest taxation

Paul_Bennett_2

Thanks for your great advise,we received compensation from Britannia last year for a missold endowment policy. They have now written to us stating that the gross interest part of the compensation may be liable to taxation and that they have notified the Tax Office.
Can this really be possible, surely the compensation is intended to help us pay the shortfall, can anyone advise?

EdInvestor

Did you receive a return of premiums plus interest as your redress? If so, the interest will be taxable, in the normal way as savings interest.

dunstonh

The redress payment includes interest and under UK law, interest is chargeable to tax.

It is not compensation.