Taxman to make money from Payment Protection Insurance

[kether]

Surely you'd only pay tax on the rate that you were due to pay in the year that the interest was deemed to have accrued? That makes for some very tricky calculations as interest rates and tax bandings fluctuated.

[dx100uk]

nope

you are being paid 'today'

dx

[PaulW922]

nope

you are being paid 'today'

dx

 

Correct

[Gbarbm]

The tax man calls it the "receipts basis" (when you got it) as opposed to the assessment basis (the years it applies to)

[shaniannie]

I have a question, purely out of curiosity, as this will not apply to me:

 

Some PPI payouts are paid directly to offset/clear other debts with the same bank, so the person never actually has any control over the money.

 

What would happen to the tax man's slice of that?

[ims21]

It is only the 8% interest which is taxable and the bank need to let you know whether tax has been deducted at source or not.

 

In any event, the 8% interest must be declared to the tax authorities by the claimant

 

ims

[shaniannie]

So, for example... someone gets their claim upheld, and it's £5,000. £1,000 of that is the 8% interest awarded. Of that, the tax man should be getting £200 (if the claimant is paying basic rate tax).

 

What would happen if XYZ bank offset the whole £5,000 against another debt with themselves. Would the claimant have to pay £200 "out of pocket" to the tax man?

[ims21]

It is up to claimants to argue with the bank that the 8% interest should be paid to them and shouldn't be part of the set off in my opinion

 

ims

[rab jenkins]

hi,

 

after dealing with a claims handler(edit),

 

the bank offered me a settlement on prior loans i didnt know about,

 

i never informed (edit),of these ones,

 

it is now 2 months after bank has settled on these and (edit),have written to me saying they have been offered a settlement on these loans

and are after there commision,

 

do i need to pay them?

 

already paid them for loans i informed them about.

[dx100uk]

start your own thread and please do not advertise

 

dx

[rab jenkins]

sorry dx,first time iv used this.thought it was a new thread