You may have been taxed in the first place because of the 8% that would have been added to your refund due to your initial claim being treated as tax on saving rather than money owed to you. 

Unfortunately millions of people are still unaware that they are owed a substantial tax refund if they were sold PPI while doing their tax even without knowing it. PPI was developed for people to be able to make any repayments they couldn’t make themselves due to unforeseen circumstances such as illness, disability or death. These policies have been being mis-sold since as far back as 1970 but not many people realised this until 2004-2005. Thanks to the Citizens Advice issuing a super-compliant to the competitions watchdog many forms of PPI became illegal to sell and sellers began having to refund people that have been mis-sold.