PPI tax?

[stitched]

Gents,
I had ppi applied to a loan without my consent a few years ago, I queried it recently and the bank confirmed they were at fault.
I've just received a letter with an offer to repay the payments with a reasonable amount of interest however they are saying a certain amount will be withheld for tax, as though this payment were income.
I would have thought that the funds they took from me were already taxed, being part of my income.
Or is this correct?

[BMWBen]

It's the interest on the premium that needs to be taxed, not the premium itself. This is probably what they mean.

[anonymous-user]

http://www.hmrc.gov.uk/manuals/saimmanual/saim2105...

[rigga]

Wife received an amount for ppi miss selling, advised she might have to pay tax, so contacted the relevent people who agreed tax was liable, wouldn't let her pay it in one go and insisted it would come out of her wages, and adjusted her tax code to suit.