PPI Payment Tax take

We had a PPI payment last tax year. It said thay had paid £640 ish in tax. So I submitted a claim and we have just had  a tax calculation back from HMRC. They have classed the PPI payment as Savings income in the income coloumn.

I was expecting to get the whole £640 back, as i thought you could earn upto £1000 from savings interest in a year.. As a result HMRC say they only owe us £200 instead of £640.

Have I got this wrong?



  • Yes you do seem to have got it wrong.

    Most people can earn £1,000 in interest before paying tax on it.

    You earned £3,200.  Which was probably due to be taxed as follows,

    £1,000 x 0% = £0
    £2,200 x 20% = £440

    Total tax owed = £440
    Tax already deducted £640
    Refund now due £200

    £200 is more than most people will get back as you usually owe a small bit on PAYE so only get say £198.
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