Payment protection insurance PPI is an insurance product sold alongside credit cards, loans and many other finance agreements. But huge numbers of policies were mis-sold because the policyholders would never have been able to claim on the insurance.
If you had any kind of credit product, such as a consumer loan, store card, credit card or mortgage up until you could have been mis-sold PPI payment protection insurance. Some mis-selling may even have taken place after this date. The deadline for submitting a mis-sold PPI claim to your bank or financial provider was agreed by the banks and financial regulator and came into effect at Exceptional circumstances claims will be assessed on a case-by-case basis, so make sure you include as much information as possible when you make your claim.
Keep all of your compensation, and send your extraordinary circumstances PPI claim direct to your provider. You can use our template letter to make an exceptional circumstances PPI claim. If your provider agrees that exceptional circumstances led to you missing the deadline, it will progress your case.
If you disagree with the assessment of your provider, you can ask the financial ombudsman service FOS for a second opinion. Your claim will be assessed by your PPI provider, who has up to eight weeks to resolve your claim from the date you made it. But you could get a refund as early as one week after your initial claim. If your provider takes longer than eight weeks to get back to you or it rejects your claim, you can appeal to the Financial Ombudsman Service for free.
You have up to six months from the date your provider rejects your claim to take your complaint to the FOS. You should receive a response within 40 days. PPI became controversial as it was widely mis-sold. Banks and lenders often sold PPI to customers without explaining what it covered. People often felt pressured to take it only to later find out that it was unsuitable for their circumstances.
For example, PPI doesn't cover you if you are self-employed or retired. PPI claims must be received by the firm you're complaining to on or before this date or they won't be considered. It's a good idea to check documents you signed when you took out a mortgage, loan or credit card as this is where any information about PPI will usually appear.
PPI may also go by other names, such as loan protection, credit insurance, loan repayment insurance, ASU accident, sickness and unemployment insurance, account cover or payment cover and will appear on statements.
In most cases, the financial business such as a bank or other business provider that sold you the PPI is the same one who provided your loan or credit product, so you should complain directly to them. To help make your claim, there are free template letters and other handy tools you can download from MoneySavingExpert or the FCA. You should also briefly explain the reason for your complaint.
Further guidance on how to claim can be found on the FCA. The amount you can claim back will depend on your circumstances, but in theory, you should get back all your premiums plus interest. Many banks have been fined repeatedly for failing to properly deal with complaints. It is only the second element, the statutory interest, which is taxable in the tax year that you receive it. Your circumstances in the tax year s in which you paid the original premiums are not relevant.
Although the statutory interest element is treated for tax purposes as savings income, it is not paid gross like bank interest. Most of the time, basic rate tax is deducted at source on the interest element of a PPI pay-out before it is paid to you.
The tax is then passed to HMRC on your behalf. If this is the case, it is possible to claim back the tax which has been deducted at source. You can make a claim for a tax repayment on your PPI interest using form R40 or form R43 if you are living overseas. You can either do this online, or by downloading and printing off a paper form to send by post. You can access the form R40 on GOV. UK , together with instructions about how to complete the form.
In completing the form R40, you should input the net interest in box 3. You should then input the tax deducted in box 3. You may have had other fees deducted from the pay-out, so you should ensure that the amount you are attempting to reclaim is just the tax element. You also need to include on the form any other taxable income that you received in the tax year — including the state pension. You normally have four years from the end of the tax year in which the overpayment arose to claim a refund.
For more information on getting hold of and completing a form R40, see our page How do I claim tax back on savings income? There is a guide on how to complete form R40 to claim a PPI refund, including an annotated version, in our resources section. Skip to main content. How do I claim back tax on a payment protection insurance PPI pay-out? Updated on 13 April Tax basics. Why have I paid tax on my PPI pay-out? How do I claim back the tax on my PPI pay-out?
What are the time limits for making a claim for the tax to be repaid? Where can I find more information? What income is taxable? What tax allowances am I entitled to? What tax rates apply to me? How is my tax collected?
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