Halifax changes

Mikeyorks

opinions4u wrote: »

Because the payment is not interest

In which case why are Halifax witholding 20% tax and remitting that to HMRC under the TDSI rules?

rb10

Mikeyorks wrote: »

In which case why are Halifax witholding 20% tax and remitting that to HMRC under the TDSI rules?

Because it will still count as taxable income under HMRC rules.

As this type of payment is very unusual (if not unique?), I'm assuming that HMRC don't have a procedure in place to allow it to be paid gross, as the R85s only count for interest, which this quite clearly is not.

Hopefully enough people will claim back the 20% from HMRC to make them realise it's worthwhile changing the rules.

YorkshireBoy

rb10 wrote: »

As this type of payment is very unusual (if not unique?...

Reminds me of the LTSB save the change launch promotion of a couple of years ago, where the £50 per month 'match' was also taxed.

Mikeyorks

Well I still think it's 'interest' !

Had it happened this time last year .... I bet they wouldn't have deducted 22% (Basic Rate (BR) at the time). It would have been 20% ..... which was the 'composite' agreed for source deductions from interest paid by deposit takers - to savers.

As both BR and composite are now 20% - that's dug the sand out from under me .. a little! But they will still pay it over to HMRC under the TDSI (Tax Deduction Scheme for Interest). And I guarantee they will aggregate it with their annual returns to HMRC of interest paid on relevant accounts.

However - I'll leave it there. As they are working hard to define it as 'other than interest' despite using all the TDSI mechanisms. Because I do recollect Halifax having a set to with HMRC some 25 years ago on the protocol of paying over source deductions made from interest / dividend payments. They actually had some limited success .... as that is where the Composite Rate that preceded (via Basic Rate and then Lower Rate) TDSI came from :

http://www.hmrc.gov.uk/manuals/apmanual/ap2340.htm

So I'll pause - and see how much more interesting this gets.

AniaS

The new bank accounts will be available from Monday.
I was told that when I had a customer review in my local Halifax branch today.

stphnstevey

If it is deemed as income, then you might be taxed on it again!

Does this account pay any normal interest? as the rate is not listed on their website, suggesting the 'reward' is actually interest

Adiitionally, the BBC article states 'The new account will also be credited with a standard after-tax interest payment of £5 per month'

Also the Halifax article states
credit interest will be replaced by set net cash payments after tax of £5 per month irrespective of balance

Bottom of this article also confirms it is interest
http://www.hbosplc.com/media/pressreleases/articles/halifax/2008-12-12-Anewapproa.asp?section=halifax

rb10

stphnstevey wrote: »

If it is deemed as income, then you might be taxed on it again!

No, you won't, if you are a basic-rate taxpayer. It's just like interest - tax is paid at source, then you don't need to pay more later.

stphnstevey wrote: »

Does this account pay any normal interest? as the rate is not listed on their website, suggesting the 'reward' is actually interest

Adiitionally, the BBC article states 'The new account will also be credited with a standard after-tax interest payment of £5 per month'

Also the Halifax article states
credit interest will be replaced by set net cash payments after tax of £5 per month irrespective of balance

You've answered your own question there really - the £5 per month replaces interest. So you get £5 regardless of the amount of money that's in there.

Mikeyorks

But it is remarkably adjacent to " I can't believe it's not butter".

......... obviously substituting 'interest' for the yellowish stuff.

stphnstevey

It's definately interest - but 'not as we know it, captain'

Guess instead of a fixed rate, it's a fixed amount...

Just stirring the pot and wondering if other bonuses/rewards would be classed as income for tax purposes (eg. £100 for opening A+L etc)

me_and

withnell wrote: »

How many people paying 1000 quid a month into a current account will be non-taxpayers though?

Me, for a start.

I'm a student with their student account (£3000 interest free overdraft, thankyouverymuch) and the regular saver they were giving out this summer (10% interest, bet they're regretting that offer now).

But as transfers between Halifax accounts are instant, it's easy enough for me to just transfer money around until it hits the £1000 limit. Shift £100 around ten times, and you've hit their limit already, and a free £5 is all yours