You might be due a tax rebate
LONDON, Aug. 24, 2020 /PRNewswire/ -- Most people will be aware of the Payment Protection Insurance (PPI) mis-selling scandal and deadline for new PPI complaints which was on 29thAugust 2019. However, most of the millions of consumers who have obtained a compensation since April 2016 are unaware that they could be due further money back, in the form of a rebate from HM Revenue & Customs (HMRC).
PPI compensation is calculated by the banks and is split into two parts: (1) return of the money paid in insurance premiums and (2) statutory interest. Statutory interest is classed as an income by HMRC and is therefore taxed at a Basic Rate.
Whilst Payment Protection Insurance (PPI) is the mis-selling scandal that has grabbed the headlines, rebates apply to any form of financial compensation which includes: Packaged Bank Accounts (PBA), Unaffordable Lending or more recently, Undisclosed Commission (Plevin PPI).
Personal Savings Allowance
In April 2016, HMRC introduced the Personal Savings Allowance, which allows Basic Rate Taxpayers to earn up to £1,000 in interest before any tax is taken.
Given the vast amount of consumers obtaining compensation for mis-sold PPI, the banks were instructed to withhold tax from PPI compensation and forward the money directly to HMRC, regardless of individual tax circumstances.
Since 2016 it is estimated that £13 billion has been paid out in PPI compensation and approximately £420 million has been withheld in tax, the vast majority of which consumers are due a rebate on. Given the last-minute rush to submit claims prior to the PPI deadline, this number is likely now drastically higher.
Tax Rebate
Rebate Gateway Limited (RGL) have assisted thousands of consumers obtain a tax rebate on Financial Mis-selling Compensation as well as for unclaimed Marriage Allowance and Work-place Expenses.
RGL explained: "Most customers that we deal with are due a tax rebate of some sort. The amount of rebate depends on the claim size and individual circumstances, but almost every customer who is either a non-taxpayer, or basic rate taxpayer will be entitled to a rebate."
It is also important to remember that many PPI refunds were on joint accounts and as each person has their own allowance, this doubles the potential for a tax rebate.
Anomaly
Tax experts admit that the 'vast majority' of taxpayers know nothing about this anomaly and urged HM Revenue & Customs (HMRC) to issue guidance urgently.
One expert commented: "People are really confused about the rules. I've met almost no clients who know about their rebate eligibility."
Lost Paperwork
RGL said: "In many cases customers may have lost or destroyed their original offer of compensation from their bank/lender, which is needed as part of making a rebate request to HMRC. We are able to obtain a copy from the lenders on behalf of all clients. Once the rebate has been requested from HMRC, clients can expect a rebate within 8 weeks."
Rebate Gateway can be contacted on +44 (0)333 444 1054 or via www.rebategateway.org.
