PPI TAX REFUND
PPI TAX REFUND
Did you receive a PPI payout? Claim a PPI Tax Refund for any past mis-sold Payment Protection Insurance Payments with Claim My Tax Back.
What Is the PPI Tax Allowance?
Payment protection insurance (PPI) is designed to cover repayments in certain circumstances where you couldn’t make them yourself.
These include if you are made redundant or couldn’t work due to an accident, illness, disability, or death. To understand the origin of the PPI Tax Allowance, you need to understand the PPI Tax Scandal.
These include if you are made redundant or couldn’t work due to an accident, illness, disability, or death. To understand the origin of the PPI Tax Allowance, you need to understand the PPI Tax Scandal.
PPI Scandal
As many as 64 million PPI policies were sold in the UK, mostly between 1990 and 2010, some as far back as the 1970s. The majority of these policies were mis-sold.
Complaints started in early 2004 and the scandal received new prominence in 2005 when Citizens Advice issued a so-called super-complaint to competition watchdogs about what it described as a “protection racket”.
It started with a series of events that led to the compensation payments to consumers and sales of some types of PPI being banned.
As of August 2019, banks, building societies, and other credit providers had paid an astonishing £36bn in compensation to those who were mis-sold PPI and made a claim. The typical pay-out was £2,000.
Complaints started in early 2004 and the scandal received new prominence in 2005 when Citizens Advice issued a so-called super-complaint to competition watchdogs about what it described as a “protection racket”.
It started with a series of events that led to the compensation payments to consumers and sales of some types of PPI being banned.
As of August 2019, banks, building societies, and other credit providers had paid an astonishing £36bn in compensation to those who were mis-sold PPI and made a claim. The typical pay-out was £2,000.
PPI Tax Refund Allowance
If you have successfully made a PPI claim, most lenders/banks will have deducted the tax at the basic 20% rate before sending you payment even if you are not a taxpayer.
Also, the introduction of the 2016 Personal Savings Allowance means you can earn up to £1000 tax-free on your savings interest every year. This also applies to the statutory interest paid on PPI claims.
So, to sum up, most people who have received PPI pay-outs since April 2016 have been taxed incorrectly. Now the good news is that HMRC understands this issue and is happy to return the incorrect tax deducted, as long as you make an application for the PPI tax refund.
Also, the introduction of the 2016 Personal Savings Allowance means you can earn up to £1000 tax-free on your savings interest every year. This also applies to the statutory interest paid on PPI claims.
So, to sum up, most people who have received PPI pay-outs since April 2016 have been taxed incorrectly. Now the good news is that HMRC understands this issue and is happy to return the incorrect tax deducted, as long as you make an application for the PPI tax refund.
What if my employer reimburses me?
You may still be able to claim depending on how much your employer pays you per mile. There are specific amounts on which HMRC are prepared to allow tax relief (see below). If your employer pays you less than this, you can claim a tax rebate on the difference.