PPI & Tax Credit Award

Hi, we were lucky enough to reclaim PPI on a loan we had 2004/2005. We got a payout of approx £14,300. In our offer letter, the loan company stated that it had advised HRMC of the 8% taxable amount and we would be paid a Net amount.

However, this has got me thinking about out tax credits claim. Do I need to declare the 8% taxable amount to them (around £5,100). As most of our monthly income is made up of Tax Credits, declaring this as extra income will have a huge impact on our award.

Also, just to add a claims company found this money for us (we had no paperwork for any of our paid off loans and had no idea of which lenders we had used in the past, so we really were not expecting anything). This means we owe them around £4,000 - so we will be left with around £10,000. Any money we had left was going to pay of our outstanding debts, and we were going to be debt free for the first time in 10 yrs.

Maybe a bit silly but in the past I thought as this was money owed back to you, it was yours to do with as you pleased. Now it seems I may have shot myself in the foot because we may end up worse off because of it.

Any advice gratefully received.