HMRC have now clarified the treatment of payments resulting from successful claims for missold payment protection (PPI). Refunds themselves are not taxable. Any interest added (typically 8%) is taxable, and needs to appear on the tax return. I also suggest that where any substantial amount of non-taxable income is received, clients consider making a voluntary disclosure in the additional information section of the tax return.
Anyone receiving a payment in respect of a PPI claim, please keep the paperwork you receive as this will form part of your tax records.