Bank Compensation

Bank Compensation

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Can someone advise on what the correct tax treatment is for the receipt of a payment form a bank following them having to compensate mortgage holders who were mis-sold.

I assume the payment is taxable, but is this affected by whether it is compensation or refund of interest ?

Also as the interest paid was paid over a number of years, should the receipt be back dated across those years and previous years accounts and tax computations opened accordingly ?

Thank you for any comments you can share.

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By User deleted
14th May 2014 00:03

The paperwork ...

... should break it down between refunds and taxable compensation, if you mean tax relief has been claimed on the amounts refunded then I don't know - it woud seem unfair to tax all in current year as this may make the tax paid higher than the original relief depending on the recipients income level.

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