Tax Payments Deducted from PPI Refunds

People who claimed back their mis-sold Payment Protection Insurance are often unaware they may be able to claim back the tax that was automatically deducted from their settlements.

When settlements were made they typically included three parts:

• PPI premiums;
• contractual interest; and
• compensatory interest

HMRC consider the compensatory interest element to be taxable as it is similar to interest accrued on savings.

Lenders therefore adjusted their settlements by reducing the compensatory interest by 20% which they paid to HMRC prior to paying customers.

The Government introduced a new personal savings allowance in April 2016 which means most taxpayers can earn up to £1,000 a year of savings interest without paying tax on it.  This change in rules means most people are able to claim back the tax deducted from their PPI settlements since that date.

We understand how daunting it can be to deal with the tax office and can help process your tax refund claim on your behalf on a no-win, no-fee basis.