Payment Protection Insurance
PPI TAX

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Payment Protection Insurance - Reclaim PPI

Reclaiming PPI and TAX ...

To find out about reclaiming PPI Tax please follow the links below:

* Do I need to pay tax on my PPI refund?

* Why do I have to pay tax on a PPI Refund?

* I have already reclaimed a PPI Refund how do I know if I have paid tax?

* What should I do if I owe tax on my PPI Refund?

* What if I don’t pay tax and I have paid tax on my PPI Refund?

Do I need to pay tax on my PPI refund?

People who have successfully reclaimed a PPI refund will currently be required to pay tax on any additional interest paid as part of their PPI refund.

  1. If you think you may be eligible to reclaim a PPI refund it is worth considering that you may have to pay tax on any additional interest paid to you as part of a PPI refund.
  2. It is important to know that HMRC have confirmed that there is no tax to be paid on the compensation sum received as part of a PPI reclaim, and only on any additional interest paid.
  3. It is common for many PPI reclaim amounts to include interest and therefore if you have already received a PPI refund with interest, or you are looking to make a PPI refund claim that you consider that tax may have to be paid on the interest amount.
  4. It has been quoted that the average PPI reclaim compensation sum is over £3000 which includes any interest which, if tax has not already been deducted from any interest could result in a significant amount of tax being due especially if it was unexpected.

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Why do I have to pay tax on a PPI Refund?

As part of a PPI refund claim interest will be paid. The interest paid as part of the PPI reclaim, is intended to reimburse the amount the money would have made as savings, had it not been spent on the PPI policy. In theory you would have paid tax had the amount been savings in any case, so you are not actually paying any more tax than you would have if the amount was in a savings account.

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I have already reclaimed a PPI Refund how do I know if I have paid tax?

If you have already received a PPI refund you may already have paid tax on any interest amount. Some banks deduct tax from any interest repaid but not all. The bank is under no obligation to deduct tax from the interest amount.

  • If you have reclaimed a PPI refund yourself it is worth checking with the bank who repaid the PPI refund if this was not stated on any correspondence received from the bank

Any other companies who have repaid a PPI refund have an obligation to deduct tax from the annual interest before making any PPI refund payment. In this situation it is a statutory requirement that the company declares that tax has been deducted, and shows the breakdown of the gross and net interest amounts.

  •  If you have used a third party to help you reclaim a PPI refund, and you have not been notified on whether tax has been deducted from the interest, it is worth contacting the company to check

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What should I do if I owe tax on my PPI Refund?

If you think you may have to pay tax on the interest from a PPI refund already received you should declare the amount to HMRC by contacting HMRC directly. If you have already paid tax on your PPI refund interest you do not need to take any further action.

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What if I don’t pay tax and I have paid tax on my PPI Refund?

If you have not paid tax and you have paid tax on your PPI refund interest, you can reclaim the tax deducted from HMRC.

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TaxBanana.com is here to provide you with FREE independent tax information to help you save money and pay the right amount of tax. TaxBanana.com does not provide tax advice and the information provided is to help give people a better understanding and does not constitute tax advice.

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