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  • FIRST POST
    • Aelic
    • By Aelic 31st Oct 19, 10:33 AM
    • 1Posts
    • 0Thanks
    Aelic
    PPI and Tax Credit question
    • #1
    • 31st Oct 19, 10:33 AM
    PPI and Tax Credit question 31st Oct 19 at 10:33 AM
    Hello everyone

    I wonder if somebody could perhaps guide me in the right direction on this issue. I have tried calling HMRC but after talking to 3 people, I have received conflicting advice and so am more confused than ever!

    I am a single parent working part time and earning around 12k. I receive working tax credit and child tax credit at around 110 per week. This is made up of around 65% child tax credit and 35% working tax credit. I have a mortgage.

    I recently filled in an application with Lloyds 'just to see' if I had ever had PPI on any loans or on my mortgage and was astounded to receive a letter telling me I was due a refund of 1300 for my mortgage and 10,600 on various loans I had taken out over previous years!!

    So this is where it gets confusing.....
    I am aware I need to 'declare' this to HMRC but I'm not sure how much?

    I understand that the PPI refund is NOT classed as income but interest accrued is?
    However, on the larger amount in particular, the 'compensatory interest' amounts to over 60% of the actual payout!

    So my question is, do I have to declare all compensatory interest amounts? Or do I only have to declare 8% interest of the total sum?

    Also, should I be claiming tax back? And if I do, is that going to make the amount I declare even more conrfusing?

    Hoping for any advice as I really don't want to mess things up.
    Also slightly worried that my 'unexpected windfall' which I was already mentally spending on essential property maintenance that I haven't been able to afford previously, is now going to leave me with no tax credit income for the next 12 months.

    Any help would be massively appreciated.

    Thank you in advance
Page 1
    • SonOf
    • By SonOf 31st Oct 19, 10:37 AM
    • 1,932 Posts
    • 2,178 Thanks
    SonOf
    • #2
    • 31st Oct 19, 10:37 AM
    • #2
    • 31st Oct 19, 10:37 AM
    I am aware I need to 'declare' this to HMRC but I'm not sure how much?
    only the interest element is taxed. Not the capital part (i.e. the refund of premiums).

    However, on the larger amount in particular, the 'compensatory interest' amounts to over 60% of the actual payout!
    That is quite normal on older cases.

    So my question is, do I have to declare all compensatory interest amounts? Or do I only have to declare 8% interest of the total sum?
    You tell them of any interest you have received and the tax paid at source.

    Also, should I be claiming tax back? And if I do, is that going to make the amount I declare even more conrfusing?
    There is nothing you need to do that is confusing. You just thell them the interest received and the tax paid on it and let HMRC do the rest.
    • SwansPoet
    • By SwansPoet 31st Oct 19, 1:10 PM
    • 1 Posts
    • 0 Thanks
    SwansPoet
    • #3
    • 31st Oct 19, 1:10 PM
    Ppi income tax refund
    • #3
    • 31st Oct 19, 1:10 PM
    I need to POST the form R40 to clam a ppi income tax refund but cannot find the relevant address - can anyone help?
    • Okydoky25
    • By Okydoky25 15th Nov 19, 12:09 PM
    • 1,008 Posts
    • 871 Thanks
    Okydoky25
    • #4
    • 15th Nov 19, 12:09 PM
    • #4
    • 15th Nov 19, 12:09 PM
    You can complete the R40 directly online. I did find it tricky to find the actual section for the PPI Tax calculations.
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