ppi tax refund

hilltopper47

as the sole beneficiary of my deceased brother's will I made a claim to HMRC for a refund of the tax paid (£500) by the bank on the settlement figure, I have been informed that I cannot get a refund, I am a 73 year old male living on a basic state pension plus a small DLA allowance, I made the claim after reading information on the subject on the Martin Lewis site , any advice ?  

[Deleted User]

His estate would need to make the claim, though it would then be subject to any inheritance tax.  

Speak to the executor to see how they want to handle it.

hilltopper47

Hi, I am the executor of the will and sole beneficiary, the inheritance was about £7000 , no tax paid, I provided hmrc with the settlement letter from the bank showing all the figures, is it worth pursuing the matter by way of an appeal or forget it. I thought that as a non tax payer I should be able to reclaim the tax deducted from the settlement amount.

Dazed_and_C0nfused

You seem to be confusing your role as executor with your own personal tax position.

Your own personal tax position had no relevance irrespective of when the tax was deducted.

If the tax was deducted after your brother died then it is correct and no refund is due.  

ITSokell

Just a word of warning from my recent experience of this PPI tax reclaim with HMRC. Do the basic maths before you make your claim to see if the extra income from your PPI interest pushes you into the higher earnings tax bracket. I submitted a claim only to be informed that I hadn't paid sufficient tax for that tax year due to the gross interest from my PPI refund, which counts as savings interest pushing me into the 40% tax band. I now owe HMRC just over £2000 in tax which they are going to kindly take back each month starting in the next tax year. Not the result I had hoped for.

[Deleted User]

You must have been very close to the limit to have a claim on the small amount of tax paid on the interest element of your refund to take you over

ITSokell

Not really I've only ever paid tax at 20% in 38 years of working on PAYE but the savings income interest on my PPI was significant enough to take me over which I had not even considered. HMRC had assumed £0 savings income for that tax year & even after deducting my £500 allowance it pushed my over. Lesson learnt the hard way I'm afraid.

ITSokell

Just a point of note, HMRC don't use the amount of tax that was deducted from your PPI pay-out as your savings income, they use the gross interest you received as part of your PPI claim paid at 8% of your refund.

[Deleted User]

You pay tax on the interest element only, that can sometimes be a lot but isn't always. A basic rate tax payer who earns over £17500 can earn £1000 a year in interest tax free. Given the PPI refund interest is normally 8%, you're talking about a big refund to have 8% taking you over £1000

billybong40

I have receieved a PPI refund arond July/August this year. I want to cliam the tax back. 
Will this be classed as tax paid this year, so making it it me having to wait until next the next tax year to claim it?

Dazed_and_C0nfused

billybong40 said:

I have receieved a PPI refund arond July/August this year. I want to cliam the tax back. 
Will this be classed as tax paid this year, so making it it me having to wait until next the next tax year to claim it?

PPI refunds aren't taxable income and don't have tax deducted.

Presumably you mean the statutory interest paid alongside the PPI refund.

What is your current employment position?  Do you receive a pension?

Most people are only entitled to c£200 tax back (assuming £200 was deducted) so not a life changing sum even if not claimable until next April.