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  • FIRST POST
    • nikkos123
    • By nikkos123 4th Jan 16, 9:27 AM
    • 6Posts
    • 2Thanks
    nikkos123
    Reclaim tax from PPI refund?
    • #1
    • 4th Jan 16, 9:27 AM
    Reclaim tax from PPI refund? 4th Jan 16 at 9:27 AM
    My dear grandmother, who is on a state pension, was delighted to receive three refund amounts of different loans she has had from the banks for her PPI payments.


    On each of the three separate documents there are three figures making the total amount refunded to her:


    • Total refund of PPI premiums and associated Interest paid to date
    • Statutory interest (Gross interest at 8% added to each PPI premium payment, from the date of each payment)
    • Less income tax on statutory interest (20%)
    And then the net total amount.


    Her query is that she tells me she doesn't pay tax on things (apologies, my financial knowledge is as poor as hers) and wonders if this tax is something she can claim back in any way.


    Looking forward to your thoughts and thanks for taking the time to read this,
    Nick
Page 1
    • Stevie Palimo
    • By Stevie Palimo 4th Jan 16, 9:34 AM
    • 3,097 Posts
    • 4,419 Thanks
    Stevie Palimo
    • #2
    • 4th Jan 16, 9:34 AM
    • #2
    • 4th Jan 16, 9:34 AM
    Take a look here.

    http://www.accountingweb.co.uk/article/tax-sting-ppi-refund-tale/552881


    As predicted by Rebecca Benneyworth last week, the tax treatment of awards for mis-sold payment protection insurance (PPI) is causing trouble for accountants during self assessment season.

    The actual rules HMRC applies are reasonably straightforward: if a taxpayer’s claim for compensation is upheld, they will get a refund of premiums paid, the interest they have paid on the premium if it was added to their loan, and simple interest at 8%.

    While the principle is to return the claimant to the position they would have been in if they had never taken out the policy, the 8% interest is taxable and must be declared to HMRC or included in a self assessment tax return. The term “straightforward” should perhaps be qualified, as several sections of the Revenue’s savings and investment manual are devoted to how to deal with interest on compensation payments from different kinds of institution (now thankfully standardised by the Finance Act 2013).

    As Benneyworth mentioned, PPI interest is a potential trap for the unwary at self assessment time as...
    • Nasqueron
    • By Nasqueron 4th Jan 16, 9:49 AM
    • 7,603 Posts
    • 4,840 Thanks
    Nasqueron
    • #3
    • 4th Jan 16, 9:49 AM
    • #3
    • 4th Jan 16, 9:49 AM
    Yes if she doesn't earn more than the earnings limit she can apply for a tax refund for the tax paid on the interest element, there are plenty of posts on here if you search, it's no different to getting interest on savings which would be declared / reclaimed in the same way
    • ASavvyBuyer
    • By ASavvyBuyer 16th Mar 16, 11:20 AM
    • 1,062 Posts
    • 3,104 Thanks
    ASavvyBuyer
    • #4
    • 16th Mar 16, 11:20 AM
    • #4
    • 16th Mar 16, 11:20 AM
    My wife has just received the confirmation letter that she will get a refund of PPI payments, plus the compensation interest, which has been taxed at 20%. She is a non-tax payer. The covering letter says to look at the PPI section on the HMRC website to see how to claim it back, but we can't find it.
    Did a search on here and found this topic, but can't find a topic on how to claim the tax back on the compensation interest. Maybe using the wrong terminology!
    Can anyone point us to the correct topic?
    • dunstonh
    • By dunstonh 16th Mar 16, 11:32 AM
    • 98,581 Posts
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    dunstonh
    • #5
    • 16th Mar 16, 11:32 AM
    • #5
    • 16th Mar 16, 11:32 AM
    My wife has just received the confirmation letter that she will get a refund of PPI payments, plus the compensation interest, which has been taxed at 20%. She is a non-tax payer. The covering letter says to look at the PPI section on the HMRC website to see how to claim it back, but we can't find it.
    Did a search on here and found this topic, but can't find a topic on how to claim the tax back on the compensation interest. Maybe using the wrong terminology!
    Can anyone point us to the correct topic?
    Originally posted by ASavvyBuyer

    Its like any interest. You just let HMRC know she has been taxed and the amounts and they will check and refund it.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • ASavvyBuyer
    • By ASavvyBuyer 16th Mar 16, 12:19 PM
    • 1,062 Posts
    • 3,104 Thanks
    ASavvyBuyer
    • #6
    • 16th Mar 16, 12:19 PM
    • #6
    • 16th Mar 16, 12:19 PM
    Thanks for the quick response dunstonh .
    As soon as she gets the payment we will contact HMRC.
    Thanks
    • sun73
    • By sun73 16th Mar 16, 8:13 PM
    • 477 Posts
    • 149 Thanks
    sun73
    • #7
    • 16th Mar 16, 8:13 PM
    • #7
    • 16th Mar 16, 8:13 PM
    You claim for a refund from HMRC using form R40 at the end of the current tax year or when you receive a P60 showing your taxable income for the year in which the PPI redress was paid.
    • ehinken
    • By ehinken 21st Mar 16, 2:20 AM
    • 3 Posts
    • 0 Thanks
    ehinken
    • #8
    • 21st Mar 16, 2:20 AM
    • #8
    • 21st Mar 16, 2:20 AM
    I have received letters from the bank saying I have been successful with my ppi claim and they will be deducting tax (around £800 over two claims). I haven't sent the form back yet but was wondering if this was not signed and sent back until after April 2016 whether tax would not be payable as I assume this would fall under the allowed £1,000 interest and no longer classed as income.
    If there is no guidance on this yet it might still be beneficial to wait another couple of weeks to accept the offers but would be grateful if anyone has any information about this.
    Thanks
    • Moneyineptitude
    • By Moneyineptitude 21st Mar 16, 1:07 PM
    • 25,024 Posts
    • 14,493 Thanks
    Moneyineptitude
    • #9
    • 21st Mar 16, 1:07 PM
    • #9
    • 21st Mar 16, 1:07 PM
    It's payable, if you are a taxpayer, regardless of when you send the form back. The Bank will simply deduct the tax and send you the remainder. If you feel you have been taxed by too much you'll have to contact HMRC.
    • Mersey
    • By Mersey 21st Mar 16, 2:17 PM
    • 1,660 Posts
    • 789 Thanks
    Mersey
    I have received letters from the bank saying I have been successful with my ppi claim and they will be deducting tax (around £800 over two claims). I haven't sent the form back yet but was wondering if this was not signed and sent back until after April 2016 whether tax would not be payable as I assume this would fall under the allowed £1,000 interest and no longer classed as income.
    If there is no guidance on this yet it might still be beneficial to wait another couple of weeks to accept the offers but would be grateful if anyone has any information about this.
    Thanks
    Originally posted by ehinken


    It's the tax year(s) the £ was received which is relevant.


    Yes you can ask to reclaim the tax paid on interest (on PPI, packaged account reclaims and so on) now from HMRC for 2015/16 if you don't pay income tax (<£10.8k pa).


    The £1,000 interest on savings applies from 2016/17 ie from then tax will not be automatically deducted from savings' interest; but, if you're entitled to a rebate now, there's no need for you to wait a month if that's what you were thinking.
    Please be polite to OPs and remember this is a site for Claimants and Appellants to seek redress against their bank, ex-boss or retailer. If they wanted morality or the view of the IoD or Bank they'd ask them.
    • McKneff
    • By McKneff 21st Mar 16, 2:31 PM
    • 36,725 Posts
    • 47,398 Thanks
    McKneff
    As above, request the hmrc to send you an R40 form to get a refund.

    I had the pensioner bonds last year and they have taken tax off them so I had to ring and ask how to reclaim it.

    Here is a generic number for the helpline 01355 359022 make a note of it for future reference.
    make the most of it, we are only here for the weekend.
    and we will never, ever return.
    • ehinken
    • By ehinken 21st Mar 16, 10:46 PM
    • 3 Posts
    • 0 Thanks
    ehinken
    tax on ppi from April 2016
    Many thanks for responses, I wasn't sure if this was the correct thread so apologies if there is duplication as I started a new thread on this.
    • ManchesterMike
    • By ManchesterMike 8th Jan 19, 8:37 PM
    • 1 Posts
    • 0 Thanks
    ManchesterMike
    So just for clarity .... as a tax payer I cannot reclaim the tax on the 8% interest, is that right?
    • Nasqueron
    • By Nasqueron 8th Jan 19, 10:36 PM
    • 7,603 Posts
    • 4,840 Thanks
    Nasqueron
    So just for clarity .... as a tax payer I cannot reclaim the tax on the 8% interest, is that right?
    Originally posted by ManchesterMike

    No, a lower rate tax payer can reclaim the tax paid on the interest via form R40, might need to do it at the tax year end you were paid the refund in. Higher rate tax payer you'd need to do it through your normal process as the limit is lower
    • Moneyineptitude
    • By Moneyineptitude 8th Jan 19, 10:43 PM
    • 25,024 Posts
    • 14,493 Thanks
    Moneyineptitude
    Thread is from January 2016.
    • Dazed and confused
    • By Dazed and confused 8th Jan 19, 11:23 PM
    • 5,611 Posts
    • 2,985 Thanks
    Dazed and confused
    So just for clarity .... as a tax payer I cannot reclaim the tax on the 8% interest, is that right?
    Not necessarily.

    As a "tax payer" it is possible for you to have upto £5,999 taxable interest before any tax needs to be paid on the interest.

    The exact amount depends on what other income you have (and the type of income, pension, wages etc).

    But equally you might owe extra tax on the PPI interest.

    Impossible to say without additional information.
    • Arizonalinda
    • By Arizonalinda 19th Jun 19, 10:03 AM
    • 7 Posts
    • 2 Thanks
    Arizonalinda
    Reclaiming the tax back From ppi payouts
    Iím looking into claiming the tax back from
    My ppi payouts. They were paid this year. Do I have to wait till the end of this financial year 19/20 before I can claim as it asks for annual income ?
    • Moneyineptitude
    • By Moneyineptitude 19th Jun 19, 10:09 AM
    • 25,024 Posts
    • 14,493 Thanks
    Moneyineptitude
    Do I have to wait till the end of this financial year 19/20 before I can claim as it asks for annual income ?
    Originally posted by Arizonalinda
    Pretty obviously, you won't have more than an estimate of how much you may earn this year since your circumstances could change.
    You therefore wait until the end of the current tax year or until you receive your P60 showing your annual income...
    • foxy-stoat
    • By foxy-stoat 19th Jun 19, 10:10 AM
    • 5,329 Posts
    • 3,247 Thanks
    foxy-stoat
    I’m looking into claiming the tax back from
    My ppi payouts. They were paid this year. Do I have to wait till the end of this financial year 19/20 before I can claim as it asks for annual income ?
    Originally posted by Arizonalinda
    You can reclaim at the end of the financial year you received the payout, so before April you can reclaim now, after that April 2020.

    What is your annual income and how much tax got deducted?
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