PPI success but unsure of figures - low interest; no compensation and tax deducted !

[welshnewbie]

Hope someone can help I have received a letter upholding my claim in respect of PPI sold; but I can't make head nor tail of their repayment calculation.

 

Refund of premiums 900 paid between 2000 and 2005

Compound interest 300

Refund of over limit fees 20.00

Compound interest on fees 1.20

less claims paid 800

Total Refund due 421

Gross int @ FOS rate 60.00

less tax @ 20% 12

as your complaint has taken more than eight weeks to resolve 20

less tax @20% 4

Total Offer 485

 

I have changed the figures for anonyminity purposes but they are broadly the same. Using the statements I have the PPI began in 1998 not 2000 and I have most of the statements - there is a diff of around £200; also using the spreadsheet downloaded from here the interest is much more .............do I use the card interest to the date the account closed and then 8% from then on ? or do I use the card interest all the way through to the claim date; but even if I change the card interest to the date the card closed it is still a lot more than they have offered ? What about the tax charged - they don't know my tax status ?

 

I have read something in the FOS website that they have to rebuild the account as if the PPI wasn't there - is there something about the way payments to the account are allocated that may affect their calculations or are they just trying it on.

 

I recently had a claim upheld from another company and basically I got about three times what I had paid in so I expected this one to come out at about twice what I had paid less what they had paid me whichis quite a bit more than I have been offered.

 

Any help would be welcome here.

[citizenB]

I dont understand why you are paying tax on that lot ? Someone will be along to help you soon.

[ims21]

Hi

 

Deducting tax is outrageous....they are not taxable income. They are a refund of something you had already paid out of taxed income. They are clearly idiots.

 

If you buy some goods for £100 and they are faulty, when you take them back the shop doesn't refund you £100 less tax!!!

 

Which band of jokers is this?

 

Regards

 

ims

[postggj]

i agree

 

insurance premium tax is built into the ppi from the start

 

this smells of welcome

[ims21]

Sorry

 

Didn't answer the main thrust of your question....got carried away with the bizarre tax bit.

 

Recovered now.

 

You mention this was for a credit card. What you should expect to get at the least is the ppi payment plus compound interest at least at the rate they were charging you from the date of each payment right up to settlement date. After all they've had your money right up to date.

 

Which spreadsheet did you use for your calcs?

 

Regards

 

ims

[turtlesnapper]

Quick point on Tax.

1. Compensation is Not Taxable. The £20 for delay is Compensation.

2. Statutory interest at 8% is Income on your money and thus if you pay tax this could be liable to tax and technically you should declare it to the Inland Revenue. But that does not give the company the right to deduct tax from it at source.

 

I don't quite understand what you mean by 'claims paid'. Was this a partial refund of PPI and interest or was it payment made under the policy?

[ims21]

Hi

 

In respect of the tax on interest, take a read of this...

 

http://www.consumerwiki.co.uk/index.php/Tax_on_Interest

 

If the bank have taken tax off you at source on the interest element (very unusual) then they need to supply you with a certificate of tax deduction because if you are not a taxpayer then you'll want to claim it back from dear old HMRC and to do that you'd need a cerificate.

 

The refunds of premiums are not taxable

 

Regards

 

ims

[welshnewbie]

Hello and thanks for your commenting- its one of the RBS group ! I used a spread sheet similar to the simple one in this tutorial.......I had made a clain on the ppi in early 2004 and so the claim amount deducted is for that.- it won't let me link but its from an interest tutorial posted by librarian in June of this year.

 

I will have a read of the link as regards interest. Still doesn't seem a lot ! for the length of time.

[welshnewbie]

Have just read the letter and apparently it is a gesture of goodwill with no liability admitted! they call the interest compound interest based on the amount charged on the card at the time. I rang the FOS today for some clarification and they weren't much help and there is about a nine month delay so if I can sort this out myself all the better.

I would appreciate some help on this as it looks like I will need to rebuild the account

The queries I have are :

How are payments to a card allocated ?

Was I right in using the calculator for the compound interest and should I have stopped on the date the card closed or continued to the claim date ?Can someone please confirm that there is no tax due on the compensation - as I read I believe not.

I am OK about the tax on the interest but I can ask to have it paid gross ?

thank you

[landy_alert]

Hi welshnewbie

 

I had the same thing happen when I reclaimed from Direct Line (also an RBS company) last year on behalf of my OH. They informed him that the refunded interest had tax deducted. When I queried this in writing, their response was as follows -

 

'In relation to the tax that has been paid on the interest aspect of your refund, this is standard procedure in line with HMRC requirements. The interest payable to you is treated as income and tax paid on that income accordingly regardless of the customer's financial situation.

 

If you believe you are exempt from paying tax, you would need to contact HMRC accordingly. We are unable to provide any advice in respect of this and would not have any involvement in this aspect of your payment apart from paying the tax. If necessary, you should contact an accountant or Tax Office to seek further advice. Please let me know should you require a Certificate of Deduction of Income Tax (Form R185) if you are a non tax payer.

 

In response to your request to evidence that we have paid tax to HMRC, this is an internal accounts procedure which we are neither able nor obliged to provide you with.'

 

I must confess that we did nothing further regarding this - although maybe as OH was self-employed and earning very little at the time, we should have done

 

Anyway, in all of my PPI reclaiming, RBS is the only company I've come across who have done this........

 

Let us know how you get on,

 

Landy x

[welshnewbie]

Thanks for getting back to me landy; the other company said it was taxable but that i had to declare it. Was the calculation of your calculation of interest etc correct ?

by the way .............talking to my friendly neighbourhood tax adviser (the other half) they said that you are not too late to claim it back - get a cert and amend your tax return .............you have till end of january next year to amend a 2010 tax return and then January 2013 to amend a 2011 tax return if just google how do i amend my tax return and make sure you get pages from the UK.

[welshnewbie]

Does anyone have any idea about the interest and incorrect dates - should I write ?

thank you

[welshnewbie]

Just changing the title

[welshnewbie]

comments please

[welshnewbie]

Hello just thought I would give you an update - rang the company last week and when I said the dates were wrong they said that is as far back as they can go but I then said I had statements from earlier they asked me to send copies and they will recaluclate the offer; when I queried the tax on the compensation (?) they described it as not compensation but compound interest. I have also calculated the interest on the initial payments and when I take it through to their date and finish it when the card stops it is roughly correct and then its simple interest on top from then on so basically its ££ x 8% = simple interest not ££ x 8% per annum.

As regards the interest I am going to ask if they will pay it gross - if not I will ask them to give me a certificate of deduction of tax - presumably they are going to need my tax details for this ? I will quote the relevant section from the link above.

Will keep this updated as I hear from them.