PPI, the taxman and an 'arrangement'
Discussion
Basically, due to my own stupidity a few years ago, I am in an 'arrangement' with my creditors (I'd rather not use the actual name of it if that's ok.). As part of this, I had to have the dreaded PPI followed up and the really good news is that I had a fair amount due to me.
Normally, you get paid both the balance of payments outstanding (a) and the interest on the balance outstanding.(b) From this interest (b), income tax is deducted at 20% before it is sent to you. Clearly you then have to pay the PPI company you have used their cut (c).
Now in the 'arrangement' I am in, all of (a) goes directly to my creditors after the payment (c), while I get to keep the interest (b). Happy days!
However. If I have to pay tax on (b) does that mean I have to pay tax on (a)? And if do have to pay income tax on (a), is the taxable figure (a)-(c) or do I pay it on the full amount of (a)?
The way I look at this (of course!), is that I already paid tax on (a) because I was in full time employment PAYE when the payments came out of my salary on PPI I didn't know I had and I still am in full time employment PAYE. As my payout is a nice amount of money and will be coming through before the end of January, I would be very grateful to know what my position is reference the taxman before I spend money I should have given him.
Thanks in advance.
Normally, you get paid both the balance of payments outstanding (a) and the interest on the balance outstanding.(b) From this interest (b), income tax is deducted at 20% before it is sent to you. Clearly you then have to pay the PPI company you have used their cut (c).
Now in the 'arrangement' I am in, all of (a) goes directly to my creditors after the payment (c), while I get to keep the interest (b). Happy days!
However. If I have to pay tax on (b) does that mean I have to pay tax on (a)? And if do have to pay income tax on (a), is the taxable figure (a)-(c) or do I pay it on the full amount of (a)?
The way I look at this (of course!), is that I already paid tax on (a) because I was in full time employment PAYE when the payments came out of my salary on PPI I didn't know I had and I still am in full time employment PAYE. As my payout is a nice amount of money and will be coming through before the end of January, I would be very grateful to know what my position is reference the taxman before I spend money I should have given him.
Thanks in advance.
Eric Mc said:
Have you had any advice from the provider?
They just confirm that they take the tax away from the interest payment. They say that if have any questions I should contact HMRC but unsurprisingly no one from either RBS or the 'arrangement' company want to give me any direct advice. As I mentioned, I don't see any reason why I should talk to the taxman but I have a friend who works in corporate finance and they were suggesting that I need to confirm it wasn't liable.So I came to the PH collective because I'm not ringing the taxman when I don't need to!
The Hypno-Toad said:
They just confirm that they take the tax away from the interest payment. They say that if have any questions I should contact HMRC but unsurprisingly no one from either RBS or the 'arrangement' company want to give me any direct advice. As I mentioned, I don't see any reason why I should talk to the taxman but I have a friend who works in corporate finance and they were suggesting that I need to confirm it wasn't liable.
So I came to the PH collective because I'm not ringing the taxman when I don't need to!
It's really off that the providers of the product seem reluctant to tell you how it is handled for tax purposes. Surely that would have been a fundamental part of how the product is "marketed"?So I came to the PH collective because I'm not ringing the taxman when I don't need to!
Eric Mc said:
The Hypno-Toad said:
They just confirm that they take the tax away from the interest payment. They say that if have any questions I should contact HMRC but unsurprisingly no one from either RBS or the 'arrangement' company want to give me any direct advice. As I mentioned, I don't see any reason why I should talk to the taxman but I have a friend who works in corporate finance and they were suggesting that I need to confirm it wasn't liable.
So I came to the PH collective because I'm not ringing the taxman when I don't need to!
It's really off that the providers of the product seem reluctant to tell you how it is handled for tax purposes. Surely that would have been a fundamental part of how the product is "marketed"?So I came to the PH collective because I'm not ringing the taxman when I don't need to!
Anyway thanks for all your help, guys. I will look forward to the end of January now.
Was there any aspect of a "gain" over and above the interest that you have received?
In other words, is the amount you are getting back higher than what you put in and can any of the "extra" amount be looked on as something other than "interest" or "compensation".
You do need to be careful when investments are "cashed in" as there could be a "chargeable event" involved.
In other words, is the amount you are getting back higher than what you put in and can any of the "extra" amount be looked on as something other than "interest" or "compensation".
You do need to be careful when investments are "cashed in" as there could be a "chargeable event" involved.
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