Have I overpaid tax on interest received on bank compensation.

Rooleeds

Hi all,

Earlier last year I successfully claimed against Natwest, that I’d been mis-sold a packaged bank account.
I received all of my monthly accounts fees back, ~8 years worth, £1670, and interest at 8%, £1600.
However, I had £320 deducted for tax on the interest.

I was under the impression that the first £1000 of bank interest is tax free, so should’ve I only paid 20% tax on the £600 over the £1000 threshold? Ie: only about £120?? Or if you cross the £1000 threshold for bank interest, are you taxed on all of it?

Should I have paid tax anyway, on what essentially is interest over 8 yrs too???

Thanks,
Andy

antrobus

Rooleeds wrote: »

Hi all,

Earlier last year I successfully claimed against Natwest, that I’d been mis-sold a packaged bank account.
I received all of my monthly accounts fees back, ~8 years worth, £1670, and interest at 8%, £1600.
However, I had £320 deducted for tax on the interest.

I was under the impression that the first £1000 of bank interest is tax free, so should’ve I only paid 20% tax on the £600 over the £1000 threshold? Ie: only about £120?? Or if you cross the £1000 threshold for bank interest, are you taxed on all of it?

Should I have paid tax anyway, on what essentially is interest over 8 yrs too???

Thanks,
Andy

Nat West were obliged to deduct tax at 20%.

Contact HMRC. They deal with income tax.

Dazed_and_confused

Interest on PPI is taxable just like all normal savings interest. Interest on ISA's is tax free but with a few exceptions virtually all other interest is taxable.

Depending on your other income you can receive anything from £0 to £6000 and have no tax to pay on interest due it being taxed at 0% tax rates (starter savings rate for lower earners and Personal Savings Allowance rate for most others).

As antrobus says HMRC are the people to contact.