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PPI compensation & tax/benefits

spaniel-lover
Posts: 36 Forumite

I am on ESA (support group), from April I will receive £130.65 pw, I just received compensation from Barclays bank for PPI relating to the years 1997 to 1999, they sent me a cheque for £927.13, I then had to pay the third party company who handled it a fee of £254.41, Barclays bank deducted income tax of £132.92 automatically before sending me the cheque, seeing as I do not pay income tax due to being on benefits am I entitled to claim back the £132.92 from HMRC or should I just leave it?
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Comments
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If you're below the threshold, you can reclaim it. The interest part of the redress is treated as income, so you may need to declare that in case it impacts your benefits.
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spaniel-lover said:I am on ESA (support group), from April I will receive £130.65 pw, I just received compensation from Barclays bank for PPI relating to the years 1997 to 1999, they sent me a cheque for £927.13, I then had to pay the third party company who handled it a fee of £254.41, Barclays bank deducted income tax of £132.92 automatically before sending me the cheque, seeing as I do not pay income tax due to being on benefits am I entitled to claim back the £132.92 from HMRC or should I just leave it?
Based on your post you would be due all of the £132.92 tax back from HMRC.
You will need to wait until April and then complete form R40 (on gov.uk). This is a simple tax return so if your ESA is taxable then you need to declare that alongside the statutory interest/compensation paid alongside the PPI refund.
The PPI refund itself is not taxable and should not be mentioned on the R40 form.3 -
Thank you.0
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Deleted_User said:If you're below the threshold, you can reclaim it. The interest part of the redress is treated as income, so you may need to declare that in case it impacts your benefits.0
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You can't choose not to notify DWP.
And by interest I think the reference was to the taxable interest, which would be £664.60 if the tax deducted was £132.92.2
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