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TonyTax
TonyTax, Tax Consultant
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I had a ppi refund last year from my bank,included in the repayment was

Resolved Question:

I had a ppi refund last year from my bank,included in the repayment
was an interest repayment they say say is classed as income by hm
revenue and customs.The refund was £424.90 do I need to do a self
assessment form for such a small amount.
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi.

Did the interest have tax deducted? Are you a 40% taxpayer?
Customer: replied 2 years ago.

I paid the bank 8% interest charge on the loan when I took

it out when they paid it me back they say it is taxable so it did

not have tax deducted by the look of it.

I pay tax at normal 20% rate.

Expert:  TonyTax replied 2 years ago.
Thanks.

Some PPI refunds have been taxed at source, others haven't.

Given how small the interest is, the fact that you are a 20% taxpayer and that you probably aren't registered for self-assessment, I suggest you call the tax office on the number here and, assuming you pay tax through PAYE, ask them to adjust your tax code for 2015/16 to collect the tax on the interest over 12 months.

Alternatively, they can issue a P800 tax calculation to assess the tax due and then send you a payslip to pay the tax in one lump sum.

There is some information on PPI refund interest and tax here.

I hope this helps but let me know if you have any further questions.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15882
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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