I am due to receive a large refund from my bank for mis-sold payment protection insurance (which was insurance cover for my business overdraft).
The amount will cover payments I made from more than one business account over several years but will be paid in one lump sum into my current business account.
What is the best way to deal with this?
Hi Stuart,
I would record that as a Money Received transaction with the Type field set to 'General Payment' and the From Account set to 'Uncategorised Income'. However, please check this with your accountant as he/she may prefer a different approach.
Regards,
I am in a similar position with a PPI refund which is made up of two parts - a) refund of premiums and b) interest.
As only the interest element of a refund is taxable, should I just show that as 'uncategorised income'?
My thinking was that if I include the refund of the premium in the 'uncategorised earnings', it will surely be included with the taxable turnover when I fill i my tax return.
Could I avoid this by using a different 'Transcation Type' or 'From Account'? Or can I set up a different type of account to cater for the refund received?
Hi Robert,
If you recorded the original premium payments as an expense (which reduced your taxable earnings) then it seems to me that you would need to record the refund of those premiums as income (which increases your taxable earnings). Therefore I think you should use 'Uncategorised Income' for the full amount of the refund payment.
However, I'm not an expert on this - please check with your accountant.
Regards,