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PPI Tax Refunds
PPI Tax Refund
A PPI tax refund relates to the tax that was deducted from the statutory interest portion of your Payment Protection Insurance (PPI) compensation. When consumers received a PPI refund, it usually included three elements:
Why is Tax Deducted?
Tax is deducted from the statutory interest part of the compensation because it is considered as savings income by HMRC (Her Majesty's Revenue and Customs). Banks and financial institutions typically deducted 20% in tax automatically from this interest before paying it to you.
Who Can Claim a PPI Tax Refund?
You may be eligible for a tax refund on this deducted amount if:
- You’re a non-taxpayer or basic-rate taxpayer: If your total savings income (including statutory interest) was within your Personal Savings Allowance (PSA), you might be owed a refund.
- You paid more tax than required: If you are a higher-rate taxpayer but paid more than the required tax, you may also be eligible for a partial refund.
- Basic-rate taxpayers have a PSA of £1,000.
- Higher-rate taxpayers have a PSA of £500.
- Additional-rate taxpayers have no PSA.
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