Is interest on PPI compensation classed as an asset ?

[sterling]

Is interest on PPI compensation classed as an asset? Apologies for asking this once again but I can't find anything in previous posts. If the interest accrued over the period of the IVA then surely this is a windfall? I appreciate that individual proposals will give precise information about IVA's but I would expect a general rule would be in place (and the reasoning for it??)

[deeps227]

Hi Sterling
Going through the same thing with PPI. the statuory interest is yours and tax needs to be paid. in my proposal and chairmans report it states: 1.9 : All of my assets at the date of these propsals are being excluded from this proposal with the exception of any interest in my residential property as set out above.



b) Standards and conditions para 3.6: ASSETS : All assets not specifically included in proposals, will be deemed to be excluded.

Any windfall, in excess of £500, recieved by a debitor must be immediately paid over to the supervisor for the benifit of creditor

But PPI claimd are deemed as ASSET

be aware if the bank does not fully break the claim down you could miss out on any payment ..as what happened to me. and to get this I HAVE TO DO THE CHASING!!!!! dispite E i F taking 40% for fees

[Heretoday]

Deeps,

While in your case the statutory interstest may be yours, this wil not apply to every one. There is conflicting views on whether PPI is an asset or a windfall.

Each IP is taking a different stance and view on this!


Sterling

You need to speak to your own IP and find out what their stance is on it. If you are not happy with their reply then explore it further.

[JJSIDE]

Again there are conflicting views on the Interest portion of any PPI refunds. You are personally liable for the Income Tax on the interest portion of the refund - that seems to be agreed by all, and most IP's are either refunding the Tax portion to the individual or paying the tax to HMRC on the individuals behalf. Make sure the this is the case and that the tax isn't being paid to the creditors as HMRC will be coming calling for the tax eventually. As to the rest of the interest, the general consensus is that this is Income arising from an asset ( if the PPI is deemed to be an asset and is not excluded from the proposal ) and that it is to be included in the IVA and distributed to creditors. However, some IP's are giving back the entire interest portion to the individual and some are distributing to the creditors.

[suky424]

I asked my IP about this interest portion and he has agreed to refund the portion that will need to be paid as tax so I will not be out of pocket. I'm not really bothered about whether I get to keep the interest portion, I just want to make sure I can pay the tax man when he comes knocking. I don't like him!!

[plasticdaft]

Does tax need paid on the interest if you aren't actually receiving the interest if it's all going to creditors?

Muddie waters indeed.

Paul

[JJSIDE]

The way I understand it, is that because the interest is paid on compensation made to the individual, there is a personal tax liability for that interest, regardless of who atually receives the interest monies, either paid to the the individual or distributed to the creditors. But as an individual, you don't want want to end up with the tax liablilty but none of the interest payment! At the very least the Tax liability should either be returned to the individual or paid to HMRC on teh individual's behalf.

[suky424]

Exactly as I see it JJSIDE!

[orchid5]

DFD have indicated that they will be sorting out HMRC on behalf of their clients, didn't Melanie bring this up some while ago and that it was under discussion re the interest?