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PPI and DWP

Apologies if this has been asked before. I have found out today that I will be receiving a PPI payout approx £2600, £1600 is gross interest which I know I have to declare to DWP as I receive tax credits. I used a claim company and will have to pay them over £600 from the total amount I receive. My question is do I declare the £1600, as my income wont be increasing by that amount due to the payment to the PPI company, or doesn't that matter?

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