A PPI tax reclaim can get more complicated that you may originally have thought. That’s why it is always helpful to have a trained solicitor on your side to help you understand them. One of the main question you have is probably about whether or not you are actually eligible for a PPI tax reclaim. You may be self-employed or may not be a tax employer in the UK, but that’s okay! Gowing Law Solicitors has helped so many people in your position. Claimants who may have been turned away from HRMC are more than welcome to come to Gowing Law for help. We can help you understand how you can move forward with your claim and get your money back. Check out our PPI self-assessment form for more information.
The basics of a PPI reclaim
Before we jump into PPI tax and whether or not you are eligible, let’s start with the basics of PPI in general. That way you can fully understand why your bank/lender may have taxed your PPI pay-out. They are a bit different from making a work injury or traffic accident claim, so make sure to read this carefully:
As you can see from the description above, many people took out PPI in order to protect a financial scheme they had invested in or needed to pay back. This included:
- Credit Cards
- Visa Cards
- Credit Schemes
Unfortunately, when PPI was sold it was usually not suitable for the person who owned it. For instance, it may have been sold to someone who owned their own business. Why would they need it if they got ill? After all they were the one who paid their own wages. Therefore, they did not need any financial protection if they got sick. This meant that the PPI scheme was not suitable to be added to their loan. Many people became victims of this scheme because it was simply not suitable for their needs. That is why the deadline was set for the 29th August 2019 to ask for their money back.
Why was tax taken off your PPI pay out?
Now, when a loaner/ bank returned your money it is very likely that they automatically took away 20% of your pay-out. This is because the main aim of your PPI claim is to return you to that original financial position you were in before you made a loss. If you suspect that this happened to you then you need to check either your tax statements or the PPI pay-out statement. According to Becky O’Connor, a financial specialist from Royal London,
“If you have received a payout for PPI compensation, it is worth checking the statement for details of any tax paid on the interest element of your refund. If it was and tax was not due because the interest income was within your personal allowance or you are a non-taxpayer, you may be entitled to request a refund.”
This leads us on to another point about why you could be due this tax back. It is important to understand the amount you paid out in relation to your own personal allowance. Your PPI payment should have included an annual interest of 8% every year. This was to compensate other claimants who may have lost money due to their mis-sold PPI policy. You should be able to have this interest returned to you alongside your tax. This is what is known as PPI interest. It’s important to understand that this PPI interest could have also been taxed, meaning that it is likely that you should be able to get more money back.
Could you be eligible for a PPI tax reclaim?
Normally, if you have had tax taken off your PPI claim, you can have it returned to you if you have kept within your own personal savings allowance or are a non- tax payer. This is because the interest was not necessary for you to make up the amount you paid in. If this has happened to you then you may be considering filling in a R40 form. However, there are some other ways that you could be eligible for a PPI tax reclaim.
Covid-19 has changed the world as we know it. As people in the UK have currently just come out of lockdown, and most are considering how they can safely go back to work, it is very likely that the tax you pay from your work or the amount you receive through your wage is going to change. Before the pandemic, you may have simply been trying to change jobs or you may have unfortunately lost your job. These job changes have affected the amount of income you have brought in, therefore you may have been paying too much in to your PPI payments. That means any interest that was added to your payments was unnecessary and can be reclaimed.
Paying for your PPI through your job wages is one thing, being made redundant and using your redundancy payments pay is completely different. If you were made redundant by your employer, your redundancy wage should have been used to sustain you until you found a different job. Instead, you wasted the money on a policy that you never actually needed. That is why you are eligible to get this money back.
Another thing that could affect the amount of income you bring in, and therefore the tax you pay on it, is your pension. Now, here at Gowing Law we do deal with mis-sold pensions that have robbed people of their life savings. But in terms of a normal pensions, this is different. You will have 25% of your pension tax free. However, you will pay 75% through income tax. This means that your own personal savings allowance should be around £12,500. If you go under this allowance then you should be allowed to pay some of the tax back. If some of your pension payments have gone in to paying for PPI then you should be allowed to get this money (and the tax) back. You could also be eligible if you have used income from a life or pension annuity.
Previous Tax Assessments
If you have previously filled out a tax assessment then you may have seen that you were eligible for PPI tax reclaims. This is because it tallied up all of your income and will display what taxes were paid on what payment. You may see additional payments that you originally did not realize you were paying in accordance to your PPI agreement. If you believe that you have paid too much on different taxes on your income, you can ask for it to be returned to you. You can write a letter of grievance to your lender/bank to let them know of your intentions and that you do require information to move forward with your claim.
Payments from abroad
Not everyone has stayed in the UK between 2016 and the present day. Some people may have taken out PPI and then moved abroad to pursue a business in a different country. They may have learned about the basics of PPI and then used their financial loan to try and work elsewhere. Additional interests may have been put on the tax and the PPI because the person was no longer in the UK. You will have to check with your solicitor to see if this has happened to you. If it has then you may be in for a higher pay-out. It entirely depends on your own personal circumstances.
PPI Plevin Case
Now, this is a bit different from getting tax on your PPI, but it is still something that you may want to consider doing. A PPI Plevin case is where you were paying an unreasonable amount of commission on your PPI to the loaner or your bank. You may not have been aware of it and so only found out when you tried to make your PPI claim. Make sure to check your tax statements carefully. That way you can see if anything underhanded has happened without your realizing it. You should never have been put in to this position in the first place, therefore you are due compensation.
If you pursue this type of case, you will not be allowed to claim tax on your PPI claim. So make sure to discuss it with your solicitor before you decide what legal battle you want to pursue. Gowing Law Solicitors also help clients with PPI Plevin cases, so make sure to get in contact with us to let us know how we can help you!
The evidence needed for a PPI tax reclaim
It is extremely likely that you are eligible for a PPI tax claim. If that is the case then you need to start considering legal action. You can fill out the R40 for on your own, but this can get very complicated, especially if you need to figure out what sort of evidence you have to prove that you are owed PPI tax claim compensation. Take a look at our infographic below to see some examples of how you can prove you are owed your tax back:
One of the most important things you need to remember is that you need to keep as much documentation as you can. Whilst some of it may not be useful in the long run, each communication or legalized loan document can show how much you have paid over the years. In turn, this can demonstrate why your tax should never have been taken off your PPI claim in the first place.
Make sure to keep these safe for your solicitor. That way they can be used to strengthen your case when you fill out your R40 with the help of your lawyer.
Gowing Law Solicitors can help you with your PPI tax reclaim!
So far, Gowing Law has managed to receive £10,000 in rebates for our customers! This includes helping customers who have already been turned down from HMRC. That’s why it’s time for you to get in contact with Gowing Law Solicitors. We can start working on your PPI tax reclaims case ASAP. All of our customers are impressed with our experience and our useful online submissions system. You could be owed £100’s back from HMRC. So, why not have our experienced lawyers start working with you? That way you can earn some extra money. This can be spent over the summer or saved for a rainy day.
If you are ready to work with Gowing Law Solicitors, feel free to fill in our submissions system to get started. This will let our solicitors know all of the basics information they need to get focused on your claim. The average turnaround time, once this is completed, is around 5-6 weeks. So you should have your tax repaid in no time.
You can also contact Gowing Law directly to talk about PPI tax claims. Call 08000418350, email email@example.com or use our DM system located on our contact page. A member of our team will then be in contact to talk about your claim. Let us know if you have any questions! We would be more than happy to help you.
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