PPI refund and tax

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  • [Deleted User]
    [Deleted User] Posts: 26,612 Forumite
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    societys_child wrote: »
    Another old post :huh: this time from last April . .
    To be fair, this is the second time it's been bumped since then.
  • philharnott
    philharnott Posts: 17 Forumite
    societys_child wrote: »
    Another old post :huh: this time from last April . .
    Would be grateful for your view on this. A neighbour had a little under a thousand pounds of tax deducted from his 8%. He's a basic rate payer and he's just showed me a cheque from HMRC for whole sum.
  • [Deleted User]
    [Deleted User] Posts: 26,612 Forumite
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    philharnott wrote: »
    Would be grateful for your view on this.
    I recommend you learn how to start a new thread, Philhanott. It's really not difficult and you will garner far more relevant replies than bumping ancient threads.

    Thanks.
  • philharnott
    philharnott Posts: 17 Forumite
    Moneyineptitude wrote: »
    I recommend you learn how to start a new thread, Philhanott. It's really not difficult and you will garner far more relevant replies than bumping ancient threads.

    Thanks.
    I recognise the experience and knowledge of you & SC and would value your view/opinion/answer.
  • [Deleted User]
    [Deleted User] Posts: 26,612 Forumite
    First Anniversary Name Dropper Photogenic First Post
    philharnott wrote: »
    I recognise the experience and knowledge of you & SC and would value your view/opinion/answer.
    Please start your own thread and elaborate therein what you want us to comment on. :)
  • philharnott
    philharnott Posts: 17 Forumite
    Moneyineptitude wrote: »
    Please start your own thread and elaborate therein what you want us to comment on. :)
    Quite straightforward: Neighbour had all tax deducted refunded by HMRC - £990+ - so why the reference to c £200 in the April post when deducted figure is almost £300? Simple question really.
  • Nasqueron
    Nasqueron Posts: 8,808 Forumite
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    It's almost certainly a typo


    You are taxed 20% on the 8% interest refund element, you can claim the lot back if you have earned less than £1000 in interest over the year
  • philharnott
    philharnott Posts: 17 Forumite
    edited 20 October 2018 at 4:19PM
    Nasqueron wrote: »
    It's almost certainly a typo


    You are taxed 20% on the 8% interest refund element, you can claim the lot back if you have earned less than £1000 in interest over the year
    My neighbour = 1 PPI loan complaint upheld and refund made & about £4800 is ( clearly detailed ) 8% of statutory interest & a tax deduction on that of £960. He has no other forms of savings & earned income is less than his tax free allowance. MSE and others, including HMRC, indicates that the ceiling for return of tax for him - and us all - should be £200. He thinks they've refunded £760 too much and that's how it seems to me. Just looked at his P60 for 17/18 - his PPI refund was in Feb - and total taxable emoluments is £11489.67.
  • Dazed_and_confused
    Dazed_and_confused Posts: 6,458 Forumite
    Uniform Washer
    edited 3 November 2018 at 10:53PM
    It sounds like your neighbour will have been able to utilise the savings starter rate of tax where upto £5,000 of savings interest is taxed at 0% (the Personal Savings Allowance only kicks in after this).

    If their only taxable non savings income (wages, pension etc) was the £11,489 then they would have had the full £5,000 savings starter rate available (plus £11 unused Personal Allowance).

    They wouldn't actually have enough income to even be able to use the Personal Savings Allowance tax rate (also 0%).

    This assumes they got the standard Personal Allowance of £11,500 i.e. hadn't applied for Marriage Allowance or claimed any expenses etc (tax code on P60 would normally be 1150L).
  • Dazed_and_confused
    Dazed_and_confused Posts: 6,458 Forumite
    Uniform Washer
    In an earlier post you referred to the neighbour as a basic rate payer - was this an assumption which turned out to be wrong or is there some additional information which hasn't been disclosed?
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