Tax on Interest, from compensation - Corsa Sport - for Vauxhall and Opel Corsa B, Corsa C and Corsa D

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Kyle T

Premium Member

Registered: 11th Sep 04
Location: Selby, North Yorkshire
User status: Offline

5th Apr 13 at 09:59

Imagine this scenario, insurance payout has only just been paid from an incident over 10 years ago so has built up a fair bit of interest during the various appeal/court delays.

Payout is paid, with interest - what should the recipient declare to the tax man?

I'm under the impression that the compo itself can't be taxed, but what about the interest that it's built up?

Is this something that can be/should be ignored - and Mr Tax man will work it all out? Or should the recipient be proactive with it?

Ta.

Lotus Elise 111R

Impreza WRX STi

AndyKent

Member

Registered: 3rd Sep 05
User status: Offline

5th Apr 13 at 10:52

I would say the interest forms part of the compensation and isn't taxable either......

Maybe

James

Member

Registered: 1st Jun 02
Location: Surrey
User status: Offline

5th Apr 13 at 10:56

I would be pro-active otherwise it will cause hassle further down the line.

I would assume if the comp isn't taxed then the interest won't be either.

Kyle T

Premium Member

Registered: 11th Sep 04
Location: Selby, North Yorkshire
User status: Offline

5th Apr 13 at 11:10

I know the proper answer is just to call the HMRC, so will do that next week at somepoint - but CS has usually got a relevant anecdote which may help!

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Impreza WRX STi

Brett

Premium Member

Registered: 16th Dec 02
Location: Manchester
User status: Offline

5th Apr 13 at 11:48

Why call HMRC? Compensation or interest on compo isn't taxable.

Kyle T

Premium Member

Registered: 11th Sep 04
Location: Selby, North Yorkshire
User status: Offline

5th Apr 13 at 11:51

If that's definitely the case, then I'm happy to just leave it - but that's the question I'm asking

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Impreza WRX STi

Dave

Member

Registered: 26th Feb 01
Location: Lancs
User status: Offline

5th Apr 13 at 11:54

Why even involve HMRC? If you ring them you'll only end up talking to some moron like the kid on here who couldn't even figure out tax bands.

Robbo

Member

Registered: 6th Aug 02
Location: London
User status: Offline

5th Apr 13 at 11:55

http://lmgtfy.com/?q=is+interest+on+compensation+payments+taxable+in+the+uk

First link... HMRC... answer.... hey presto.........

Dave

Member

Registered: 26th Feb 01
Location: Lancs
User status: Offline

5th Apr 13 at 11:55

http://www.adviceguide.org.uk/england/tax_e/tax_what_is_taxable_income_e/taxable_and_non-taxable_income.htm

Compensation for personal injury and any interest on top of that isn't taxable.

Robbo

Member

Registered: 6th Aug 02
Location: London
User status: Offline

5th Apr 13 at 11:56

and the answer is, of course, yes

granted, the link from lmgtfy is for PPI but applies to any compo IIRC, that was just to clarify for those millions who re-claimed PPI

Robbo

Member

Registered: 6th Aug 02
Location: London
User status: Offline

5th Apr 13 at 11:57

"A spokesman from HMRC said: "No tax is generally due on the repayment element of compensation paid to those mis-sold PPI. However, the additional interest is taxable – in line with other compensation claims."

Brett

Premium Member

Registered: 16th Dec 02
Location: Manchester
User status: Offline

5th Apr 13 at 12:00

Interest up to the time of judgement isn't taxable.

Robbo

Member

Registered: 6th Aug 02
Location: London
User status: Offline

5th Apr 13 at 12:03

I don't recall the specifics but when i was taking my tax exams it was always 100% taxable as it is effectively a gratuity for late payment hence income hence taxable

Kyle T

Premium Member

Registered: 11th Sep 04
Location: Selby, North Yorkshire
User status: Offline

5th Apr 13 at 12:07

I've read a couple of links, some specific to PPI, others to personal injury and I seem to be getting conflicting info.

This is neither PPI or PI for the record, it's life insurance.

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Impreza WRX STi

Tom

Member

Registered: 3rd Apr 02
Location: Wirral, Merseyside
User status: Offline

5th Apr 13 at 13:16

When I won my PPI claim, they sent me a letter saying I would need to pay tax on the interest earnt only (which I worked out as about £200), not happening unless they ask for it!

Ian

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