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Are You Eligible for a PPI Tax Refund?

If you received a payment for mis-sold payment protection after April 2018, you could be due a refund, find out more below to see if you are entitled to money back with a Tax refund.



PPI Pay-Out’s, Interest and Owed Tax

Most savings interest has been paid without any tax being taken, but PPI still has 20 per cent automatically deducted.’ Martin Lewis (Cashback King)

Most firms would have automatically deducted tax at the basic 20% rate on PPI payouts even though not everyone would have had to pay. Non-taxpayers have the right to claim back all of the tax they paid from HMRC.

At the start of the Tax year in 2018, the personal savings allowance was introduced. This allows taxpayers to earn £1,000 a year tax-free interest on their savings – including statutory interest on PPI claims. As PPI is taxed at the point it is paid in a lump sum, most of those who have paid tax on PPI payouts since, are entitled to money back.

‘The reason you’re taxed is that the statutory interest is paid to try and return you to the position you would have been in if you hadn’t been mis-sold PPI.’ Martin said.


Tax Reclaim on Pay-Outs After 6th April 2018

If you were a non-taxpayer in the year the PPI was paid out, unless statutory interest pushes you over the tax-paying threshold, you can claim all of the tax back that you were taxed at the time.

Since April 6th 2018, the personal savings allowance is a further specific amount most taxpayers are allowed to earn tax-free just on savings interest:

Basic 20% rate taxpayers (earning £12,500-£50,000) can earn £1,000 in interest a year tax-free. Higher 40% rate taxpayers (earning £50,000-£150,000) can earn £500 in interest a year tax-free. Top 45% rate taxpayers (earning over £150,000) don’t get a personal savings allowance.

This is as well as the normal income-tax personal allowance.

Consumers would be due all PPI tax paid back if the total interest is less than the personal savings allowance. Claims can be made up to four years back as well as the current tax year.


Claims for PPI Payments Received Before April 2018

There is nothing to claim back for basic-rate taxpayers who should have been paying the normal 20% tax as this was what was automatically deducted. However, those earning just enough to pay tax (starting savings) or non-taxpayers should be able to reclaim some or all the tax. This is just like other usual savings income.

Claim Today
As your Tax Agents, we are here to ensure the whole process is as smooth and simple for you as can be. 1. We ask that you complete a few basic questions on our online form and we will do the rest. 2. We will liaise with HMRC and deal with all queries put forward. 3. Once approved, you will receive your Tax Refund check through the post! It’s as simple as that!

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