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Compensation received due to mis-selling of interest rate hedging products was taxable income

By Mark McLaughlin, March 2026

There was no error of law by the First-tier Tribunal in its decision that bank compensation for the mis-selling of interest rate hedging products received by the taxpayers as basic redress payments was property income. 

Summary 

There was no error of law by the First-tier Tribunal (FTT) in its decision that bank compensation for the mis-selling of interest rate hedging products (IRHPs) received by the taxpayers as basic redress payments was property income. 

Background 

The appellants (two brothers) ran a property rental business. In January and May 2006, the appellants jointly purchased two IRHPs from HSBC. In August 2006, the appellants jointly purchased an IRHP from RBS. In relation to all three products, the appellants received mis-selling compensation (

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