PPI customers may not be aware that they are entitled to claim back tax that was automatically deducted from their PPI settlements.
What is a PPI tax claim?
There are usually three elements to a PPI settlement:
- PPI premiums;
- Contractual interest; and
- Compensatory interest.
The compensatory interest element of a PPI settlement is considered taxable, as the HMRC consider it similar to the interest accrued on savings. As such, lenders deduct 20% of compensatory interest and pay this amount to the HMRC before making payment of any PPI settlement to a customer.
In April 2016, the Government introduced a personal savings allowance, which allows most taxpayers to earn up to £1,000 a year of savings interest tax-free. Since then, while most savings interest has been paid ‘gross’, i.e.: without any tax being taken off, PPI still has 20% automatically deducted.
This means that most people who have had a PPI settlement since April 2016 may be eligible to claim back up to 100% of the tax deducted from their PPI compensation.
How can The Claims Guys help?
The Claims Guys (TCG) are working with a third party with a wealth of experience making tax claims to the HMRC. The third party, Your Tax Rebates, can help our customers process their tax refund claim and offer support with any queries regarding the refund process.
If you have had a successful PPI claim with us since April 2016 and we believe you may be eligible for a PPI tax claim we will be in touch with further information!