IHTM10272 - Payment Protection Insurance (PPI)

An individual may have several claims against different financial institutions relating either to the mis-selling of a PPI policy in which the claimant is entitled to the return of the premiums paid or a ‘Plevin’ claim.

PPI claims normally fall within one of the following three scenarios, and the IHT consequences are as identified under each scenario:

• The PPI Claim was settled on or before the claimant’s death: the value of the claim will already be reflected in the claimant’s estate, whether in their bank account or as an uncashed cheque, and so no further disclosure will be required.

• The PPI Claim is submitted, but no indication by the time of death of whether it might be successful: personal representatives should return a nil value on the form IHT400 on the basis that as at the date of death there was no indication from the relevant financial institution as to whether or not the claim was admitted. This also includes claims that were submitted by personal representatives after the date of death.

• The PPI Claim is admitted by the financial institution, but the compensation payment is not received by date of death: applying a 5 per cent discount to the proceeds would not be deemed unreasonable. As an individual may have been sold PPI by more than one financial institution, each claim must be considered separately when applying the above criteria.

It can be seen that the value of the right to pursue compensation or apply any discount depends on the particular facts of the case.