Summary: This article clarifies the time limits that are applied to reclaiming payment protection insurance, as well as an o
Payment protection insurance (PPI) is designed to repay the minimum monthly repayment on a loan or credit for a specified period if an individual becomes ill, or loses their job, and is unable to keep up the repayments themselves. However, in recent years, PPI has come under scrutiny as many cases have been highlighted whereby the PPI was mis-sold to the consumer at the point of sale of the original credit.
Assuming an individual can show they were mis-sold PPI, they are able to contact the company originally responsible for providing the credit (and often the PPI) to request compensation. One of the most common questions asked about reclaiming PPI is how far back can it be reclaimed. There is a lot of information available online stating it has to be within the last 6 years, however, this is not always the case. As a general rule, PPI can be reclaimed on loans that were still active (ie still being repaid) up to 6 years ago, not necessarily from the date the insurance was taken out. That said there may be circumstances meaning it can be claimed further back if the relevant proof is available.
Can I also reclaim interest on my PPI payments?
The simple answer is yes, and there are many tools online to help calculate the amount an individual to claim for. Clearly the further back the claim goes, the higher the amount of interest can be claimed.
Do I have to pay tax on my PPI compensation?
According to the HMRC website, generally tax will not be charged on the actual PPI compensation. However, it is possible (and probable) that tax will need to be paid on the interest that is also repaid. Sometimes, the PPI provider will deduct the tax owed at the basic rate (20% at the time of writing), if not, then the individual should contact their local tax office for further details on how to pay.