Bank with Barclays, Halifax or Co-op? You may need to pay tax on your rewards

No rewards are given to you as a token of appreciation.

No idea why MSE considers this to be news many months after it was debated to death on numerous threads about how PSA only applies to interest rather than cashback/rewards that have always been taxable....

Edit: it was established that these non-interest payments wouldn't be covered by PSA five months ago in https://forums.moneysavingexpert.com/discussion/5407456

As someone who has managed to avoid filling in tax forms so far, I really have no desire to have to inform the tax people of anything.

Luckily, I'm with Lloyds, who just pay interest, rather than some reward scheme.

Co-Op and Halifax, sure. But when did the Barclays thing became so clear???

Barclays doesn't discount the 20%, they always use "may" when saying it "may be subject to income tax".

https://www.help.barclays.co.uk/faq/accounts/added-features/tax-blue-rewards.html

Rewards you receive for being part of Barclays Blue Rewards may be subject to income tax and you may need to declare them to H M Revenue & Customs. If you’re unsure whether you need to declare your rewards, you should speak to an independent financial adviser.

http://www.barclays.co.uk/bluerewards/rewards

Rewards you receive for being part of Barclays Blue Rewards may be subject to income tax and you may need to declare them to HM Revenue & Customs.

And then we have this article first saying

This reward's classed by HMRC as 'miscellaneous income' and isn't included in your PSA, so IS subject to income tax.

and later

They're not covered by the PSA but not taxable either. Barclays says that's because they're classed as 'miscellaneous income, cashback or a discount.'

Plus in http://forums.moneysavingexpert.com/showpost.php?p=70534081&postcount=119 it is said:

My sister is self employed (basic taxpayer) and has to complete a self assessment form and has just opened a Barclays Blue Reward account. After reading this thread she contacted HMRC to find out if she needs to pay tax on the rewards and where to put it. They told her that NO she does not need to pay tax on the reward and also there is no place on the form to put rewards as this is not interest or other income. She did mention reading this forum.


The member of staff checked with the tech team and they also confirmed that Barclays Blue rewards are not taxable at present as nowhere to put on the self assessment form.

In any case, if the Barclays £7 is taxed it's not very clever from Barclays.
Had they just given £4 you would get £3.20 or £2.4. But giving £7 and charging you £3 you get £2.6 or £1.2. High-rate tax payers get *half* the money because of the stupid £3 fee.

I can't see how the whole £7 can be taxable.
Surely only the "net profit" is taxable.

And even more confusing is the way that Barclays throw their hands in the air and tell their customers that it is their problem. HMRC aren't going to tell taxpayers about specific cases - that's why it's called self assessment.

I can see that Barclays are going to end up in hot water at some point because "annual payments" should have tax deducted at source (same rule now as before), and a certificate of tax deduction provided to the customer. This provides a flag to low income customers - "Might be able to reclaim the tax" or higher rate taxpayers - "Have to declare this". Instead they get nothing and a potential tax bill + interest when HMRC catches up with them.