TODAY’S BLOG

PPI – ANOTHER PAYOUT?

Just when you thought you had seen the last of PPI, I am here to tell you that it’s not over until the tax taken is repaid… If you’re one of the millions of people who’ve shared in the £34billion of PPI repaid (so far), you may have paid tax unnecessarily. If so, and your payout happened in the last four tax years, you are due money back. The money you get paid back for PPI can have up to three main elements:

  • A refund of the PPI you paid.
  • If the bank (outrageously) added an extra loan to your original loan just to pay for the PPI you get back any interest you were charged on this extra loan.
  • You get Statutory Interest (at eight per cent a year) on the total of both those sums, for each year since you got the PPI.

Only the third element is taxable. Any tax taken is usually shown on your payout statement. Tax is due because this Statutory Interest is designed to return you to the position you’d have been in if you hadn’t had PPI. If tax is due on PPI payouts, most firms deduct it automatically, at 20 per cent, before you get the money. That has always been an issue for non-taxpayers. However, since April 6, 2016, far more people have been owed tax back, as that’s when the personal savings allowance launched. It allows most taxpayers to earn £1,000 a year of savings interest, tax-free. Since then, while most savings interest has been paid without any tax taken off, PPI still has 20 per cent automatically deducted. Therefore, oversimplifying somewhat, it counts as savings interest, as if you’d earned it on that saved cash.

PPI AGAIN

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

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GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

info@solomonsifa.co.uk    Call – 020 8542 8084

SOLOMON’S FINANCIAL PLANNING APP

Our free powerful new Finance & Tax app.
To get started download and use password – solomons

   

WHAT WE’RE ALL ABOUT

If you would like a no-nonsense one page document explaining what financial planning is all about please enter your email here.

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