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    • Mrs Arcanum
    • By Mrs Arcanum 6th Feb 16, 10:22 AM
    • 15,780Posts
    • 31,951Thanks
    Mrs Arcanum
    Halifax Reward and the new Tax free Savings
    • #1
    • 6th Feb 16, 10:22 AM
    Halifax Reward and the new Tax free Savings 6th Feb 16 at 10:22 AM
    Curious as to how this will work with the new savings tax-free threshold.

    Currently, Halifax pay £1.25 in tax to the treasury for every monthly £5 reward to the customer. So how will this work when the new tax-free threshold comes into effect? Will Halifax simply stop paying the treasury and not pass on the saving to the customer or what?
    You do not gain an O when you lose. Loose means baggy/let go.
Page 7
    • me_and
    • By me_and 20th Apr 16, 10:38 AM
    • 41 Posts
    • 21 Thanks
    me_and
    For a payment to be an annual payment, according to HMRC's SAIM8020, it needs to be "pure income profit", and SAIM8040 states it's critical "whether payments can be said to be made in return for something the recipient has provided, and has incurred expenditure on providing."

    Barclays Blue rewards, unlike the Halifax rewards, are contingent on paying a fee, i.e. you have to incur expenditure to get the reward. As such, they're not pure profit, so they don't count as "annual payments". They don't (as best I can tell) fit into any other category of taxed income, either, so I think it's correct* that Barclays Blue rewards aren't taxed.

    It does beg the question why Halifax don't just add a 1p fee and increase the reward to £5.01, thus removing the tax obligation...

    (* "correct" with the meaning of "in accordance with HMRC guidance" rather than with the meaning of "makes any sense whatsoever".)
    • polymaff
    • By polymaff 20th Apr 16, 12:47 PM
    • 1,730 Posts
    • 743 Thanks
    polymaff
    For a payment to be an annual payment, according to HMRC's SAIM8020, it needs to be "pure income profit", and SAIM8040 states it's critical "whether payments can be said to be made in return for something the recipient has provided, and has incurred expenditure on providing."

    Barclays Blue rewards, unlike the Halifax rewards, are contingent on paying a fee, i.e. you have to incur expenditure to get the reward. As such, they're not pure profit, so they don't count as "annual payments". They don't (as best I can tell) fit into any other category of taxed income, either, so I think it's correct* that Barclays Blue rewards aren't taxed.

    It does beg the question why Halifax don't just add a 1p fee and increase the reward to £5.01, thus removing the tax obligation...

    (* "correct" with the meaning of "in accordance with HMRC guidance" rather than with the meaning of "makes any sense whatsoever".)
    Originally posted by me_and
    Donovan stated that an annual payment is not solely money out of the blue. In all the cases we are considering there is a contract and hence an expectation of profit. In my opinion the money paid by Barclays consists of a return of capital and a remainder that is pure profit. In the £5.01 Halifax idea you suggest there would be a one penny return of capital and £5 of pure profit. There would be a liability to tax in both cases

    I will be declaring £4 per month from Barclays and £6.25 per month from Halifax as other income, the former untaxed and the latter already taxed at £1.25 per month.
    • Abbey1991
    • By Abbey1991 7th Jun 17, 5:19 PM
    • 56 Posts
    • 10 Thanks
    Abbey1991
    For tax returns, I think this comes in as "other income":
    • On page 2 of "Tailor your return", for "Did you receive any other UK income, …", select "Yes"
    • Under "Other UK income", tick "Any other income"
    • On the following page, put the gross payment (£6.25/month, so £75, assuming you didn't miss any payments) in the "Other taxable income" box
    • Put the tax (£1.25/month, so £15 assuming you didn't miss any payments) in the "Tax taken off income box"
    • Write something to the effect of "Annual payments received in return for holding a Halifax Reward Current account" in the "Description" box.

    I can't imagine this situation is going to persist for long; the "other income" pages are clearly not intended for many people to ever use, but there's going to be a lot of people who will now be filling them in (or at least who ought to be).

    If you've historically reported the payments as interest (as I have), I think technically you ought to notify HMRC of the errors. You can still do this online for the 2014/15 tax year, but you need to write to HMRC for previous years. That said, as I understand it, reporting the income as interest rather than an annual payment won't have made any difference to the actual tax due (at least until 2016/17), which means there's nothing extra to pay to HMRC and no penalty HMRC could assess for not telling them.

    Whether or not you declare it as interest or an annual payment prior to 2016/17, from 2016/17 onwards you probably want to declare it as an annual payment (and declare the tax paid); if you're a basic rate tax payer who isn't up to the Personal Savings Allowance, it'll make no difference, but if you pay tax at any rate other than the basic rate, or you earn enough taxable interest to take you over the PSA, you'll be out of pocket if you don't.

    As for claiming tax back on an R40 form, I honestly have no idea. As best I can tell treating the reward payments as an annual payment essentially means you just shouldn't be able to claim it back.
    Originally posted by me_and
    As this looks like the correct answer, it would be nice if Martin could include it in the rather vague page http://www.moneysavingexpert.com/news/banking/2016/07/halifax-barclays-or-co-op-bank-customer-you-may-need-to-pay-tax-on-your-rewards which talks about "annual payments" as if everyone knows what that means!

    And thanks for your help!
    • YorkshireBoy
    • By YorkshireBoy 7th Jun 17, 6:36 PM
    • 29,446 Posts
    • 17,230 Thanks
    YorkshireBoy
    As this looks like the correct answer, it would be nice if Martin could include it in the rather vague page http://www.moneysavingexpert.com/news/banking/2016/07/halifax-barclays-or-co-op-bank-customer-you-may-need-to-pay-tax-on-your-rewards which talks about "annual payments" as if everyone knows what that means!

    And thanks for your help!
    Originally posted by Abbey1991
    In the meantime, anyone wanting their info sooner (and from the horses mouth) could pop along to the HMRC website, type 'annual payments' in the search box, click the 7th result returned, and read.


    https://www.gov.uk/hmrc-internal-manuals/savings-and-investment-manual/saim8020
    • newlease
    • By newlease 1st Oct 17, 5:43 PM
    • 72 Posts
    • 12 Thanks
    newlease
    So for Halifax Reward I need to submit as £6.25 x 12 under "other income"? I'm completing an online self assessment so if you could mention precise location on the form that would help tremendously.
    • polymaff
    • By polymaff 1st Oct 17, 6:28 PM
    • 1,730 Posts
    • 743 Thanks
    polymaff
    So for Halifax Reward I need to submit as £6.25 x 12 under "other income"? I'm completing an online self assessment so if you could mention precise location on the form that would help tremendously.
    Originally posted by newlease
    Boxes 17 and 19, page TR3 of form SA100, 2017
    • newlease
    • By newlease 1st Oct 17, 9:25 PM
    • 72 Posts
    • 12 Thanks
    newlease
    Boxes 17 and 19, page TR3 of form SA100, 2017
    Originally posted by polymaff
    Superstar! Halifax actually changed the rate in February so it will be £67.50 in box 17 and £13.50 in box 19. I will mention "Halifax reward" in box 21 and that should be job done.
    • TrustyOven
    • By TrustyOven 1st Oct 17, 11:59 PM
    • 625 Posts
    • 651 Thanks
    TrustyOven
    Superstar! Halifax actually changed the rate in February so it will be £67.50 in box 17 and £13.50 in box 19. I will mention "Halifax reward" in box 21 and that should be job done.
    Originally posted by newlease
    Which will be £67.00 and £14.00 because they want you to round down / up. (Page TR 1 says "round down income and round up expenses and tax paid, it is to your benefit")
    Goals
    Save £12k in 2017 #016 (£4212.06 / £10k) (42.12%)
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    • newlease
    • By newlease 2nd Oct 17, 7:08 PM
    • 72 Posts
    • 12 Thanks
    newlease
    Which will be £67.00 and £14.00 because they want you to round down / up. (Page TR 1 says "round down income and round up expenses and tax paid, it is to your benefit")
    Originally posted by TrustyOven
    Thanks, I do remember this rule but if I recall when doing online the system does it automatically.
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