Written by John Kruse, one of the leading experts on Bailiff Law, this consumer friendly guide is essential reading for anyone who comes into contact with a bailiff.
The book is easy to understand and clearly explains the rights
a bailiff has, and also what they cannot do when collecting debts and repossessing goods etc.
Essentially we have been told by the Inland Revenue that any statutory or contractual interest received as part of a settlement for unlawful charges is taxable.
Ok, so we have to pay tax on the interest?Life ain't getting any fairer, is it!But, by reading the above link, it only applies to banks. I suppose credit cards aswell?
I've had 2 refunds from catalogues, and one from Capital One so far.
Does anyone know what the percentage of this tax deduction will be?
thanks,
jellybabe
The tax deduction will all depend on your total gross income.
If your total income (inclkuding intrest payments) for the 2006-07 tax year is less than £5035, there is no tax liability.
Income is between £5035 and £7185, the amount of all income in this bracket is taxed at 10%
If your income is in excess of £7185 but below £38335, then the tax on earnings is charged at 22% (in this band), on intrest is charged at 20%, and dividends is charged at 10%
If your lucky enough to earn over £38335 then the income in excess of this will be taxed at 40%. (Except dividends which are charged at 32.5%)
I've had 2 refunds from catalogues, and one from Capital One so far.
This paragraph may be of interest to you, although it may be possible that it is not the catalogue company you are claiming from but their financial institution.
Thus banks are acting correctly in paying interest without deducting tax. The "ordinary course of banking business" exception does, however, apply only to banks, so should any of your members obtain refunds of charges from companies that are not banks - insurance companies or non-bank credit card issuers, for example - they will find that tax is taken off.
If you have had tax deducted at source you should request a tax deduction certificate. If you don't earn enough to pay 22% tax, you could be due a refund of tax.
Thanks for all the replies. i'm afraid, i will have to pay 22% then on the Capital One claim. DRAT!
The 2 catalogues i was claiming from were Studio Cards and Argos store card.
Thanks for all the replies. i'm afraid, i will have to pay 22% then on the Capital One claim. DRAT!
The 2 catalogues i was claiming from were Studio Cards and Argos store card.
Sorry, have just updated my earlier thread as was slightly innacurate.
Tax on INTREST payments is charged at 20% within the £7185 to £38335 band.
sorry for being a nuisance, but i just want to make sure i am seeing it right.For example my claim against argos card was £330.
Then i added interest on the penalties, 8% after filing and 8% on interest on penalties.That was even before i knew about claiming back contractual rate, hence onlz the 8%.
If i understand that right, it's everything apart from the £330 that needs to be taxed?
Please be kind to me, i'm a woman after all
Any interest that was refunded to you is not taxable. The only taxable items are statutory and contractual interest.
It has been pointed out that you need to be absolutely sure of what you are being refunded. I will check a couple of points regarding this with HMRC shortly and ask Seminole to amend the original posting if necessary, so keep eyes peeled on it.
If you are claiming a charge back, and you charge the bank/credit company intrest, then there will be a taxable charge on the intrest only.
Checking the information I have, and asking a few people at work, ANY intrest from this type of claim, statutory or contractual, is taxable.
If however the bank are refunding intrest that they have taken from you, and not adding intrest ontop of this whole claim. then there would be no tax liability as they are refunding what you have paid out.
I didn't want to mention it but I work for the Revenue. I'll try and get some definative answers on Thursday when I'm back in work.
Read the thread with the info from the tax people.
I'm not convinced. I was always under the impression that awards of compensation by a Court were always free of tax because it isn't income. This money is compensation to you for not having your money - it's only designed to put you back - as far as is possible - to the position you were in, or would have been in, had you not had your money taken in the first place.
P.
Northern Rock; S.A.R sent 11/8/06 - Delivered. Recieved details of 6 yrs charges on 8th. Wrote back asking whether or not they hold information going back further than that.
MBNA; S.A.R sent 11/8/06 - Delivered 14/8/06
Barclays; S.A.R - (Subject Access Request) request sent 11/8/06 - Del 14/8/06
Diners Club; S.A.R sent 11/8/06 - Delivered 14/8/06. Recieved form to fill and return with fee on 17/8/06. Sent form back, delivered 4/9/06.
Intelligent Finance; Prelim letter emailed 16/08/06, claiming £318. Email recieved from "Anne-Marie" 17/8/06 saying my email has been passed to Customer Relations dept. Fob-off letter received 23/8/06, letter sent in return same day - Delivered 24/8/6 Recieved letter offer 25% settelement - refused - LBA sent. MCOL on 10th revcieved notification that they intend to defend on 13th. 06/9/2006 WON!!!!!!
but the compensation may be construed in part as the loss of potential to invest the money and interest paid on investments attract taxation i believe.
Whereas compensations for say an injury would not be the same i think.
JMHO
Glenn
Kick the shAbbey Habit
Where were you? Next time please
Abbey 1st claim -Charges repaid, default removed, interest paid (8% apr) costs paid, Abbey peed off; priceless
Abbey 2nd claim, two Accs - claim issued 30-03-07 Barclaycard - Settled cheque received
Egg 2 accounts ID sent 29/07 Co-op Claim issued 30-03-07
GE Capital (Store Cards) ICO says theyve been naughty
MBNA - Settled in Full
GE Capital (1st National) Settled
Lombard Bank - SAR sent 16.02.07
MBNA are not your friends, they will settle but you need to make sure its on your terms -read here Glenn Vs MBNA
I would say based on personal experience that the situation is as mufc1999forever and Glenn have described it. Remembering that the amount of money owed to you is various fees plus interest paid by you to the bank. Any interest you get above this is additional "unearned" income, and would be nominally taxed at 20% if you pay tax.
but the compensation may be construed in part as the loss of potential to invest the money and interest paid on investments attract taxation i believe.
Whereas compensations for say an injury would not be the same i think.
JMHO
Glenn
It may be, agreed. Fact is though it wasn't invested because you didn't have it. You may very well have invested it, put it in premium bonds, spent it or gambled or drank it away. The interest you are claiming is to compensate for not having the use of your money thereby not being able to choose to do those things, not because you were unable to put it to a specific use.
P.
Northern Rock; S.A.R sent 11/8/06 - Delivered. Recieved details of 6 yrs charges on 8th. Wrote back asking whether or not they hold information going back further than that.
MBNA; S.A.R sent 11/8/06 - Delivered 14/8/06
Barclays; S.A.R - (Subject Access Request) request sent 11/8/06 - Del 14/8/06
Diners Club; S.A.R sent 11/8/06 - Delivered 14/8/06. Recieved form to fill and return with fee on 17/8/06. Sent form back, delivered 4/9/06.
Intelligent Finance; Prelim letter emailed 16/08/06, claiming £318. Email recieved from "Anne-Marie" 17/8/06 saying my email has been passed to Customer Relations dept. Fob-off letter received 23/8/06, letter sent in return same day - Delivered 24/8/6 Recieved letter offer 25% settelement - refused - LBA sent. MCOL on 10th revcieved notification that they intend to defend on 13th. 06/9/2006 WON!!!!!!
I've just posted an update in the Legalities thread dealing with goodwill gesture payments by the banks in settlement of claims.
We've been advised by the Revenue that such payments are not taxable nor do they need to be declared. The important point to note here is that such payments must be specifically described as "goodwill gesture" payments and can only be classified as such if they are made before a court claim is raised. Payments in settlement after a court claim has been raised don't count I'm afraid.
Please feel free to ask any questions about this as the distinction is quite subtle.
Is this just for business or for individuals as well!
Surely, if this is for individuals, if you did not use the interest they charged you to ofset against your tax, why should the return of our money be taxed!! I really do not understand this!
DS
Is this just for business or for individuals as well!
Surely, if this is for individuals, if you did not use the interest they charged you to ofset against your tax, why should the return of our money be taxed!! I really do not understand this!
DS
The refund is not taxable - this is money missing from your account on which you have already paid tax. The interest you were charged is not taxable - this is money taken by the bank, and they will have already paid tax on it. Any additional interest you claim on top of this (i.e. interest you are charging them for use of your money) will be classed as "unearned income" and is assessable for tax.
Important Tax Information
received as part of a settlement for unlawful charges is taxable.
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Re: Important Tax Information
Originally Posted by jellybabe
DRAT!
