How Do I Work Out The Taxable Amount?

[Sceptre]

I have been awarded a gross amount for a PPI claim, so haven't been given the amount of premiums that I have paid over the years. How do I work out the nett figure that the 8% will have been applied to?

I don't think I can. Any help would be good.

[March-Hare]

Surely the 8% will be applied to the Gross amount? If so:

(8/100) x gross amount = x (8% figure)
Gross amount - 8% figure = new amount

[SMP]

When I got a PPI payment it was all down on paper how they reached the figure, including the 8%.

[Sceptre]

Right. I think I've got it March-Hare. So that figure is subject to Income Tax @ 20%? Thanks.

This bank didn't give me a breakdown SMP. Cheers.

[boxtops]

Go back and ask them, sceptre - all the settlement letters I've had on PPI claims have been laid out to say

Refund of preiums £x
8% interest £x
total payment £x

They must know that figure, otherwise it'll be 8% of what?

[Sceptre]

Yes, I think I will boxtops. I just thought there might be a quick way of doing the sum.

[boxtops]

The 8% is paid to you gross by the way, it's up to you to declare it to the taxman as additional income.

[Sceptre]

Yeah, I know boxtops. Thanks.

[factor-fiction]

Is it just a straightforward 8% figure?
I thought the interest was calculated at 8% pa rather than just a one-off addition to the value of premiums paid

[factor-fiction]

If it's just a straight 8% addition to the net (100%) figure then the gross total is 108% of the net figure. So to find the net figure you divide the gross figure by 1.08.

However I'm sure the tax is applied only to the interest and not to the net amount. The taxable amount is therefore the gross amount minus the net amount.

Also' I'm wondering whether the 8% addition is per annum, not just a one-off addition.

The best way forward is to check your paperwork as they will have given a breakdown somewhere. Or ask them for a proper breakdown- they will be able to provide it easily