Millions to be taxed on their PPI compensation

Published by Ruth Jackson on 05 December 2011.
Last updated on 05 December 2011

Insurance claim form

Millions of people who were mis-sold payment protection insurance (PPI) will be taxed on their compensation.

HM Revenue & Customs has stated that while no tax is due on the compensation element of the payouts, the 8% back-dated interest people are receiving will be taxable.

Compensation

Around 6.4 million people were mis-sold PPI when bank advisers – working for a hefty commission – pushed this product to people such as pensioners, the self-employed and stay-at-home mothers who would never be able to claim on the policies.

After a lengthy campaign earlier this year, the High Court ordered the banks to pay out compensation. The banks have set aside £6 billion to cover claims.

As a result of the decision to tax the interest, the Treasury should rake in £350 million.

 

More About

PPI

Leave a comment