PPi success - Taxation

[Deleted User]

With all those responses, I doubt "rugbyant"will need to ask again.

MiloLilly

I find myself in a similar situation to rugbyant, having been a basic-rate taxpayer throughout the 16 years during which my bank was dishonestly extracting PPI from me. After a long and arduous battle, it finally paid up – in the year in which I became a higher-rate taxpayer. That will cost me £400+ in income tax this year.

Ironically, if it had continued prevaricating until the current tax year, I'd at least have been able to offset that obligation against the new £500 tax-free allowance.

How fair is that on a scale of "that's quite unfair" to "that's an absolute travesty, Martin"?

dunstonh

How fair is that on a scale of "that's quite unfair" to "that's an absolute travesty, Martin"?

Its not unfair. You didnt pay the interest. You are now receiving it. Interest is taxed in the year it is paid. I am sure there are many who where higher rate taxpayers in the past who are not now. So, its swings and roundabouts. Its just one of those things. Of course, you could make a pension contribution and get 40% back.

MiloLilly

Oh, I wouldn't be complaining if the boot were on the other foot, certainly, dunstonh. I'd be quietly thankful that I'd benefited from this inequitable situation.

Now I'm just noisily cursing myself that I hadn't realised earlier that I'd been systematically bilked by my lender – and done something about it years ago.

It's the cost of naivety, I suppose.

[Deleted User]

MiloLilly wrote: »

Oh, I wouldn't be complaining if the boot were on the other foot, certainly, dunstonh. I'd be quietly thankful that I'd benefited from this inequitable situation.

You've been refunded all the PPI payments you made. This wasn't taxed. You are only paying tax on the interest element of the redress, something you would never have received if you had "done something about it years ago"

As to Martin Lewis, he'll never read your post having sold this site some years back.

MiloLilly

If my lender had paid out in 2013, the year when I actually started my compensation claim, I still would have received more than six years' worth of interest and not had to pay extra tax on that sum.

I do realise that Martin doesn't own the site, let alone patrol the forum – my hyperbolic invocation of the Mighty Lewis was a futile attempt at facetiousness to leaven my disappointing situation.

[Deleted User]

MiloLilly wrote: »

I still would have received more than six years' worth of interest and not had to pay extra tax on that sum.

Conversely, if you had been paid out in 2013 then you wouldn't have received an additional three years of interest which accrued since then.

It's all swings and roundabouts.

MiloLilly

Given the years of stress I have sustained in fighting to get back what was defrauded, believe me: I'd have taken three years' less interest and no extra tax payout to HMRC with bells on.

[Deleted User]

MiloLilly wrote: »

Given the years of stress I have sustained.

The interest is at 8%; far more than you could have achieved elsewhere.

MiloLilly

Barely adequate redress for being defrauded, some might say.