Barclays package account reclaim

jhicks80

My first post so not sure if i'm in the right place but here goes.
Just had a successful package account reclaim from barclays, yay!
Received nearly £700 yay again, but, after reading through the letter received i noticed 20% was deducted for income tax purposes, boo!
The thing is the money that paid for this account actually came from my income years ago therefore income tax had already been paid on it via the paye, so now i'm paying income tax on it again and when i spend this money will also be paying vat. So now this money i earned is being taxed 3 times twice by income tax, surely to be charged income tax twice on one income is illegal.
Can anyone please clarify this for me...

HappyHarry

It is only the interest that you have received on your payments that has been taxed. This is the same as interest would have been taxed as if it were held in a bank account.

Your original payments will have been returned without the deduction of any tax.

Mersey_2

Yes, sadly almost all income and interest on savings are taxed (although there's now a £1,000 tax-free pa interest on savings allowance from this 2016/17 tax year and so interest on savings will no longer be net: it'll be gross).


You can apply to HMRC for a tax rebate for the tax deducted from the 8% pa statutory interest on any reclaims, if you earned less (below c£12k pa) than your personal allowance.