Income tax deducted from PPI payout

[Foxyflugel]

Hi everyone

My friend has just had an offer of PPI refunds from several accounts with RBS. On each one there is an overall figure + statutory interest minus income tax at 20%.

Is this right? When my sister received hers last year - it had the statutory interest of 8% but no income tax deducted.

Can't believe it if this is right!! So he has paid income tax on his wages BEFORE paying these PPI payments out of them and now has to pay income tax on the refund of his already taxed money.

Can anyone clarify this for me please?

Many

Foxy :tinysmile_twink_t2::tinysmile_twink_t2:

[enaid]

Re: Income tax deducted from PPI payout

The 20% is taken from the 8% interest see below

See SAIM9115 for changes to the rules on deduction of income tax from interest relating to compensation. The new rules apply to payments by a building society that are made on or after 1 September 2013 and to payments made by other institutions on or after 1 October 2013.