Help with claiming back income tax deducted from insurance policy

Hi all

I was the sole beneficiary for my late mother's estate two years ago. All was settled and finished with as far as I was aware.

Earlier this year I got a letter from Lloyds Bank home insurance stating that they may owe me, as the beneficiary, some money. I sent back the relevant information and they sent me a letter which shocked me somewhat.

Basically they said they owe me a five figure sum. However, 2k was deducted from this before sending it to me for 'income tax'. They noted it may be able to be claimed back from HMRC but I would need to contact them.

Now, the reason for the refund is apparently due to my mother having had two insurance policies run alongside each other for the period of 2003 until her death in 2016. This seems to have been a mistake by Lloyds rather than my mother, but it wasn't clear how two policies were set up and allowed to continue. Im not sure how much she was paying considering the payment but it must have been a fair bit!

So, anyway, I contacted HMRC and they said I needed to complete an R40 form to claim back tax from insurance and investments. I completed this and have received a reply back that because I am self employed I have to wait until the end of the next tax year April 2019 to apply.

My questions are:

1) Why should there be any tax due at all? My mother was a pensioner, and the refund was from an error covering a long time period of 2003-2016. How can it possibly be classed as income?
2) If this was declared by Lloyds when I was in the process of settling her estate, it would have been put through that it was still under the threshold for not paying inheritance tax. So no tax here either.
3) I am self employed but do not pay tax as I do not earn enough
4) Why should I have to wait until April 2019 for something which was missold back in 2003-2016?

I do not know if this is the right section, I will post it in taxes as well. I am really unsure what to do but 2k is a lot of money and I would like it back if I can get it!

Thanks for reading, appreciate any help.

Comments

  • pluginbaby wrote: »
    Why should I have to wait until April 2019 for something which was missold back in 2003-2016?
    The simple answer is that, if HMRC have told you that you cannot claim back the tax until the end of the tax year because of your self employed status, then you'll just have to wait until then.

    Sorry.


    (Please don't spam the forum with duplicate posts)
  • But why was tax taken off at all?

    I have no intention to 'spam' but I did not know which section to post it into, since it could fall into a couple of different categories. It doesn't appear to be this category anyway, so please feel free to delete.
  • POPPYOSCAR
    POPPYOSCAR Posts: 14,897
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    edited 26 September 2018 at 11:21AM
    pluginbaby wrote: »
    But why was tax taken off at all?

    I have no intention to 'spam' but I did not know which section to post it into, since it could fall into a couple of different categories. It doesn't appear to be this category anyway, so please feel free to delete.

    What type of policies were they?

    Assuming they were savings then tax would have been deducted at source unless your mother made a declaration to the tax office that she was a non-tax payer.(this changed in april 2016)

    I do not understand the error of having two policies?
  • dunstonh
    dunstonh Posts: 116,040
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    But why was tax taken off at all?

    Because that is the requirement.

    Interest is taxable income .
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
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