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  • FIRST POST
    • wildcath_20
    • By wildcath_20 19th Feb 16, 6:02 PM
    • 39Posts
    • 23Thanks
    wildcath_20
    PPI Tax for the Deceased
    • #1
    • 19th Feb 16, 6:02 PM
    PPI Tax for the Deceased 19th Feb 16 at 6:02 PM
    My deceased Mother has been taxed on a successful PPI claim which was paid after she had died. HMRC are saying this cannot be claimed back as all income received after a person is deceased is taxable.
    She was on disability allowance for the last 3 years of her life and therefore had no other income. Therefore what it comes down to is if the PPI payment was made before she died then she could claim the tax back as it would have been her only income but because she was deceased then HMRC are saying she had no tax code so it will be taxed at 20%. Is this right?

    The tax amounts to 600.
Page 2
    • Lockardian
    • By Lockardian 10th Nov 18, 4:04 AM
    • 21 Posts
    • 1 Thanks
    Lockardian
    We have estimated my income to be under 11,191 (or it may be a few pounds over). But keeping the 11 on my tax account means I would pay tax as soon as I hit 11,899 and would miss out on another 11 of tax free wages.

    Yes, the figures are pennies, but the principle is any untaxed savings interest income was coming off my tax-free allowance for wages, which seems wrong. Having savings interest shouldn’t reduce my tax free wages allowance!! Surely I’m correct about that? Yes, I will pay tax on wages if they exceed 11,910 which I understand, and yes, that then reduces my 5000 savings starter rate (but I would still have enough allowance left to not pay tax on the savings interest). He seemed to think I only had 1000 until both I and a colleague corrected him.

    Let’s say for argument’s sake I kept the 1189L code (equates to 11,899) and I earned precisely 11,910 in wages. And the only savings interest I had earned was this 11 they’ve deducted from my allowance. I would then pay tax on the 11 I had gone over my allowance. Effectively it’s my 11 interest that would be taxed, which should be tax free in this case. That’s why I feel it’s being “allocated” incorrectly.
    • Dazed and confused
    • By Dazed and confused 10th Nov 18, 5:58 AM
    • 3,203 Posts
    • 1,598 Thanks
    Dazed and confused
    The tax code 1189L was correct.

    Estimated earnings are a key element of how tax codes are calculated and on earnings of 11,191 tax code 1189L would mean no tax was deducted.

    The interest entry was due to you having unused allowances.

    If your estimated earnings had been 11,910 or greater then the interest wouldn't have appeared as there would be no spare allowances, the interest all being liable to tax at one of the 0% rates (assuming you didn't approach 150k income ).

    I don't know why HMRC didn't explain this to you

    Not worth changing it back to the correct position for such a small amount I guess but at least you know why the code was 1189L.
    • Lockardian
    • By Lockardian 10th Nov 18, 6:30 AM
    • 21 Posts
    • 1 Thanks
    Lockardian
    “Liable for tax at the 0% rate” - bloomin’ ‘eck, that’s confusing. I kinda get what you’re saying though but it hurts my head to try and understand it properly.

    If only they had explained this other than “you have to pay tax coz you’ve used up your 1000 allowance on PPI interest”, and not having any knowledge of the potential 5000 starter rate.
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