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PPI compensation claims

Demonstrating what a bizarre world we live in, we remind our readers that although PPI compensation is not taxable, the interest that will usually be included is.

If you have received a PPI compensation award, it is highly likely that you will have to pay tax on the interest element.

If you received your award before 6 April 2013, you should have prepared a tax return by 31 January 2014, so it is now too late. You are recommended to contact HMRC using the amnesty procedure currently in place.

If you received your award after 5 April 2013, you should ensure that you declare the income to HMRC no later than 31 January 2015. You will need to complete a 2014 income tax return.

Sadly, as with the changes to child benefit rules, this increases the number of taxpayers who may be required to complete a tax return who otherwise would not need to do so.