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Credit insurance or payment protection insurance is an insurance product that allows you to repay the credit in the case if the borrower dies, gets ill or becomes disabled.
In other words, it safeguards debt repayment.
A lot of the time bank employers don’t provide their clients with enough information about products, which often leads to mis-selling packaged bank accounts or mis-selling PPI.
This is why you have to be careful, ask for details and make your own decision, without someone else deciding for you.
Because the PPI is a very common mis-sold product, a lot of people end up paying for it – paying for something they are not familiar with, something they maybe don’t even need and something they probably don’t know when they’ve agreed on paying.
Paying the tax
The taxable part of PPI payments is the statutory interest on the compensation part.
Except for the statutory interest, there’s also a compensation part which is not taxable.
The taxable part is usually shown on your payout statement. You’re paying the tax because the statutory interest is a way of returning yourself to the position you would’ve been in if you hadn’t been mis-sold the PPI.
If you overpaid the tax in the tax year, you can file a PPI claim to get your repayment.
How to claim a repayment?
Following the instructions, you can file your claim by filling the form. This form can be found online – you can download it or print it.
The name of the form is R40 (or R43 if you don’t live in the UK) – ‘’Claim a refund of income tax deducted from saving and investments’’.
Filling the form
On the top of the form, above the boxes, put your name, address and the tax year you’re referring to. Write the agent’s details if you have an accountant, if not, leave it empty.
Boxes require personal information (check it twice), income information, information about the earned interest, details of the tax deducted off the statutory interest of the PPI payout,…
The most important thing – don’t forget to fill out the net interest box, tax deduction and gross amount box.
Be careful with the amounts you write. You might have been paying for a lot of fees that were not in fact tax – in this claim you should consider only the amount of tax.
Also, make sure you incorporate state pension and other taxable income you received.
Finally, don’t forget to sign the form at the end of the document.
Requirements
The time limit in which you can claim a refund is 4 years after the overpaying tax year. Make sure you don’t react after the final date!
The R40 form is often too complicated to understand for someone who just wants to get the repayment.
This is why all your help can be found at Optimal Solicitors, who can protect you from financial mis-selling and guide you through the procedure!
You may also like: The Relationship Between SOX Compliance And Taxes
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