Tax on PPI interest help!

numbersguy

Hi all

I recently had some success claiming back PPI but I'm really confused by the tax on interest

The letter states the amount I got back, and that interest was added at 8% and that tax at 20% was taken off, but it doesn't say how much was interest

The reason this matters is that the PPI I got back takes me over the higher tax threshold, so I have no idea how much extra tax I'd owe the tax man, or how to tell them

Will I just get a request from HMRC at the end of the tax year? Any help appreciated

-taff

multiply the tax taken by five, that's the amount of interest.
The redress is not taxable, only the interest.

numbersguy

I dunno what this is either, they've only listed the total amount refunded. Maybe the best thing is to ask them to break it down?

Will I then need to contact HMRC? Or will they just work it out at the end of the financial year and let me know?

-taff

Get back in touch with the company that gave you the redress and ask for a breakdown for tax purposes.

numbersguy

Yeah cool, I think I'll have to, thanks!

What do I do then, contact HMRC and pay the tax?

Nasqueron

You pay tax at 20% on the interest element, if your tax is sorted and you earned less than £1000 in interest all this year then you can probably claim it back

numbersguy

Even if some of it takes me over the higher tax bracket? It would certainly be more than £1000 in interest

societys_child

Then you need to contact HMRC and arrange to pay any tax due.

super_saver123

I recently tried to reclaim tax on the interest part of my PPI claim, but ended up owing as it took me into the higher threshold. It wasn't a huge amount, but I was given the option of paying the owed amount in full, or my tax code would be adjusted for it in the next tax year and it would be repaid through PAYE.

numbersguy

That's cool, thanks all, I think I know what I need to do.