New Tax Register plan to be unveiled
Labour says no more Free Schools
'Tax havens' hit back at G8 pressure
Concerns over Charity Tax Relief. 13.04.12
The Tax Return Initiative. 03/07/12
HMRC has announced its latest plans to launch 30 new taskforces
People who were miss-sold Payment Protection Insurance (PPI) may well be liable to extra tax payments HMRC has revealed.
The tax is not levied on the compensation itself, but, could be liable on any additional interest paid.
Last year, banks paid out £1.9bn to the victims of mis-sold PPI. An estimated £5bn is still expected to be paid out.
The average payout in compensation is £3,000. This includes a capital sum - based on the PPI premiums paid - and interest that would have accrued if the individual had never made those payments.
HMRC says the only the interest payment is taxable, but this also depends on how the compensation package was made up, because some were paid with the tax already calculated.
Mr Roy-Chowdhury, head of taxation at the ACCA accountancy body, said that the Treasury should not benefit from a tax windfall owing to the compensation payments, but should instead change the law in order to cancel any tax charged relating to PPI compensation.
Stuart Coleman, Manager of the Tax Department of ABDS says:
"There is huge possibility that some people will be inadvertently underpaying their tax, so, if you are not sure, you should seek expert advice immediately."
Great with People Brilliant with numbers Clear and precise with words