Withholding Tax on the 8% interest?

kwackerman

Hi All,

After a fairly long wait we have finally won our PPI battle with First Plus.:j

We got back just over £31k minus the £14.5k we got back in 2009 from the cash-back on the policy.:j

They are also deducting £1401.61 withholding tax??

Can anyone tell me what that is?
It goes to HMRC but are they due it? If not how do I get it back?

Thanks for any advice

Andy:)

dunstonh

Part of the refund is interest and interest is taxable at your marginal rate.

It goes to HMRC but are they due it? If not how do I get it back?

If you are a non-rate tax payer you let HMRC know. If you are a basic rate taxpayer you do nothing. If you are a higher rate taxpayer you need to let HMRC know and pay the extra tax (they are notified so will catch up with you if you dont and they can add a penalty).

If the interest element takes you from one income tax band to another then the tax is charged for each bit in the different bands.