tax on compensation

Tracey52

Hi, I received from Barclay's a full refund of PPI plus interest charges but in the letter it says I have also been awarded a certain amount of compensation which is taxable and they have already deducted the tax from it,however the letter then goes on to say that if I am entitled to claim the tax back I should contact HMRC and fill in an R40 claim form,what I need to know is how do I know if I am entitled to claim this tax back ? Is it related to whether I pay income tax or not ? I do work but do not earn enough to pay tax so would this award be classed as unearned income ? Can anybody advise me on this please ? Thanks in advance.

[Deleted User]

Tracey52 wrote: »

what I need to know is how do I know if I am entitled to claim this tax back ?

Everyone has an annual tax free earnings allowance, if you exceed this then you pay tax. However, since everyone's circumstances are different, you should contact HMRC to see if you can get a refund of the tax deducted from your redress.

Peters_pence

I have just had a letter saying I did not correctly complete my 2012 self assessment. I looked in to it and it turned out that half the compensation I got from Santander was interest and therefore taxable. I have had to pay the revenue over 3k plus interest and iam going to be fined. I knew nothing about this and always do my assessments diligently. I am so annoyed as we spent all the ppi compensation on home improvements, so our holiday fund has gone.I can appeal but ignorance is no defence in law. In this country you have to run to stand still and the punitive tax regime is outrageous.

PaulW922

Why on Earth is this a punitive tax regime? You receive interest and that is taxable - Santander make that clear on the settlement letter.