Why Have I Paid Tax On My PPI Pay-Out?

PPI pay-outs are comprised of the settlement (which is the refund of the PPI premiums paid and the interest you have actually paid on those premiums) and the statutory interest on the compensation, at 8% (paid in recognition that you were deprived of your cash for some time).

It is only the 2nd aspect, the statutory interest, which is taxable (in the tax year that you receive it). Your circumstances in the tax year(s) in which you paid the original premiums are not relevant.

Although the statutory interest component is dealt with for tax purposes as savings earnings, it is not paid gross like bank interest. Most of the time, basic rate tax is deducted at source on the interest element of a PPI pay-out prior to it is paid to you. The tax is then passed to HMRC in your place.

But you might not eventually be responsible to pay tax on the PPI interest element, for instance, if when combined with your other cost savings income for the year, the total is within your Personal Savings Allowance, or if your overall taxable earnings for the year is within your tax-free personal allowance– ₤ 12,600 in 2020/21. If this is the case, it is possible to declare back the tax which has actually been subtracted at source.

How Do I Claim Back The Tax On My Ppi Pay-Out?

You can make a reclaim for a tax repayment on your PPI tax using our online service, or You can access the complicated form on GOV.UK, together with instructions about how to complete the form.

If you are owed tax back or presume you are, you can reclaim back directly from HMRC however this procedure is an arduous one and can take an extremely long time. This is where we can be found in, we can assist you claim your tax back from HMRC that you are owed, saving you the tension of doing the long claim yourself. You can rest easy understanding you have industry professionals in the legal and monetary sector taking care of you throughout the entire procedure making it a tension totally free experience.

What Can I Receive from My Claim?

You can receive the quantity of tax you were charged on your PPI claim supplying you satisfy the requirements of claim date and tax status. Do not stress we can assist you with all this.

Why Were You Taxed?

You might have been taxed in the first place due to the fact that of the 8% that would have been contributed to your refund due to your preliminary claim being treated as tax on saving instead of cash owed to you.

Why Could I Be Owed A Tax Refund?

Sadly, countless people are still unaware that they are owed a considerable tax refund if they were sold PPI while doing their tax even without knowing it. PPI was established for individuals to be able to make any repayments they could not make themselves due to unforeseen circumstances such as disease, impairment or death. These policies have actually been being mis-sold considering that as far back as 1970 however not many individuals realised this till 2004-2005.

What Are the Time Limitations for Making a Claim for The Tax to Be Paid Back?

You generally have four years from completion of the tax year in which the overpayment developed to declare a refund. So, if you received your PPI refund in 2020/21, you have until 5 April 2025 to send a claim. If the overpayment arose in 2016/17, you have till 5 April 2021 to put in your claim and so on.

Let us assist you make a claim for cash owed for a tax refund on your PPI payment. Reclaim Tax Back on PPI with ppitaxreclaim.co.uk