News Update :

UK eyes windfall tax trouble selling loan insurance

Friday, May 11, 2012


(Reuters) - Britain stretched public finances could benefit from a windfall of several million pounds that people selling false insurance policies must pay tax on interest related to their remuneration.

HMRC, HMRC has published guidance on payment of tax on interest of the payment protection insurance (PPI) of the compensation payments, targeting higher rate taxpayers in particular.

British banks will pay an estimated £ 7 billion or more for mis-selling of loan insurance, and were lining up these days to how much money they set aside for the payment of claims as floods in.


HSBC (HSBA.L) said Tuesday it was an extra $ 468 million available. Royal Bank of Scotland (RBS.L), Barclays (BARC.L) and Lloyds (LLOY.L) also raised the amount they set aside.

The Financial Services Authority, which regulates banks, has been encouraging investors to make a claim and said last week that lenders have so far provided $ 3 billion pounds.

Compensation includes an amount paid as premiums and interest on those premiums that could be earned elsewhere.

"This is the portion of interest where hundreds of millions of pounds of potential tax windfall could come from the government," said Chas Roy-Chowdhury, head of taxation at ACCA, an accounting body.

"As the claims happening on an industrial scale, the government should amend the law," Roy-Chowdhury said.

A spokesman for HMRC said there was an old rule that interest on the compensation is taxable, adding the tax would have been due in any case if people had put their money into alternative investments such accounts savings.

It is not known how many people have taken PPI products with estimates ranging from thousands to millions.(Reuters) - Britain stretched public finances could benefit from a windfall of several million pounds that people selling false insurance policies must pay tax on interest related to their remuneration.

HMRC, HMRC has published guidance on payment of tax on interest of the payment protection insurance (PPI) of the compensation payments, targeting higher rate taxpayers in particular.

British banks will pay an estimated £ 7 billion or more for mis-selling of loan insurance, and were lining up these days to how much money they set aside for the payment of claims as floods in.


HSBC (HSBA.L) said Tuesday it was an extra $ 468 million available. Royal Bank of Scotland (RBS.L), Barclays (BARC.L) and Lloyds (LLOY.L) also raised the amount they set aside.

The Financial Services Authority, which regulates banks, has been encouraging investors to make a claim and said last week that lenders have so far provided $ 3 billion pounds.

Compensation includes an amount paid as premiums and interest on those premiums that could be earned elsewhere.

"This is the portion of interest where hundreds of millions of pounds of potential tax windfall could come from the government," said Chas Roy-Chowdhury, head of taxation at ACCA, an accounting body.

"As the claims happening on an industrial scale, the government should amend the law," Roy-Chowdhury said.

A spokesman for HMRC said there was an old rule that interest on the compensation is taxable, adding the tax would have been due in any case if people had put their money into alternative investments such accounts savings.

It is not known how many people have taken PPI products with estimates ranging from thousands to millions.
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4 comments:

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