Taxing interest in PPI refunds
As you will have gathered, I’m not a fan of Payment Protection Insurance and never have been. However if you come across someone with this and they have had a successful refund with interest, be warned. Leading accountants are suggesting that the interest is liable to taxation and will need to be declared as income as part of your self-assessment returns. Now, given that 31st January is the deadline for tax payment without a penalty this doesn’t leave much time. However, acting honestly with HMRC is frankly the only approach worth taking. Honesty is clearly not a word associated with the Banks and insurers that sold millions of these policies and as we all know, the PPI claims companies are largely just as dishonest, it is hard to work out who really wins in these situations – even good advisers that didn’t sell this (myself included) have all had numerous calls and queries from people double checking and reassuring them that Income Protection is very different from PPI. Here’s a short video from Which? explaining the nuts and bolts.