PPI

[darbo1103]

I've recently completed a PPI enquiry and got several thousand pounds back. It says the amount is classed as a taxable income and I should inform the tax office. What happens when I inform them and how much would I be expected to pay to them?

[factor-fiction]

It is only the interst that is taxable.

[factor-fiction]

If you weren't a tax payer you won't have to pay tax on the interest

[factor-fiction]

You should have been given a brakdown showing how much of the settlement covers interest. If you are a basic rate taxpayer you will be taxed at 20% on the interest element.
The reason is that if you had put the money in a bank you'd have earned interst and that would have been taxable
The interest element is generous, by the way- I recall they use a rate of something like 8%pa even though most accounts pay much less.

[darbo1103]

The breakdown says the interest is @ 8% and comes to a total of £4659.40. How much will the taxman expect?

[bednobs]

the interest comes to £4659???????
if that's the case your payout must have been Huuuuuuuuuge!

[boxtops]

The interest on the amounts I'm reclaiming is relatively small, darbo - the bank is showing me the figure they are refunding, plus an amount equal to 8% interest - it's only that second figure which you would have to declare.

[factor-fiction]

I assume the figure of £4659.40 is the total amount and that the interest amount will be only a part of this.
If you pay tax you will have to pay 20% (ie one fifth) of the interest component. .

[lichfield08]

Just tell the Tax Office, the PPI will inform them anyway and they will take 20% sooner rather than later. Just pay it while you have it ! (They will take £200 per £1000) ooouch !

[bednobs]

surely this is only going to be about 70 quid though?