How to claim back tax paid on Halifax Reward Account

7sefton

As the tax year is coming to a close, now is the first time I have ever had to reclaim the tax Halifax has kindly paid to HMRC on my behalf from the monthly £5 reward payments. I'm a non tax payer, but Halifax didn't let me fill in the usual R85 form but said I must claim back from HMRC when the tax year ends. As I have 3 Reward Accounts, this adds up to a respectable £45 over the year.

Question is, what do I have to do to reclaim? Is there a certain form I need to fill in? I'm a bit confused because I don't know whether HMRC would count the 'reward' as interest from savings, or an income.

Any advice would be much appreciated.

cottager

It would be HMRC's form R40, available from here:
http://www.hmrc.gov.uk/incometax/tax-free-interest.htm#3

jennifernil

Yep, I reclaimed mine last year.

hippey

We are still in the current tax year so they should be able to refund tax you have paid when you give them the R85.

blueberrypie

hippey wrote: »

We are still in the current tax year so they should be able to refund tax you have paid when you give them the R85.

No, the R85 does not apply to the Reward Accounts or the Reward payments. The R85 allows banks paying you *interest* to pay it without deducting tax. The Reward payment is not an interest payment.

As has been said, the OP will have to claim the tax back from HMRC at the end of the year.

rb10

blueberrypie wrote: »

No, the R85 does not apply to the Reward Accounts or the Reward payments. The R85 allows banks paying you *interest* to pay it without deducting tax. The Reward payment is not an interest payment.

As has been said, the OP will have to claim the tax back from HMRC at the end of the year.

... but when claiming it back from HMRC, you need to count it as 'interest', despite the fact that when it comes to an R85, HMRC claim that it's not 'interest'.

HMRC have clearly been totally confused by this, they don't know what to do with it!

jennifernil

It's still "income" though, and if HBOS say it is paid nett then it seems only reasonable that the tax can be reclaimed.

rb10

jennifernil wrote: »

It's still "income" though, and if HBOS say it is paid nett then it seems only reasonable that the tax can be reclaimed.

Absolutely.

I think you misunderstood my point ... which was that HMRC don't seem to know what to do, as on one hand they say that it's not interest (so you can't use an R85 equivalent), but then on the other hand (in the R40) they say that it is.

Mikeyorks

I think the issue is more with Halifax declining to accept an R85 ..... as they claim it is not 'interest'. Despite putting this on their site :-

This payment is 'net' of income tax. This means we pay it after taking off income tax at the rate set by law (currently 20%). If you are a higher-rate taxpayer, you may have to pay extra income tax on the reward payment. The gross amount is £6.25. This is the amount before we take off income tax. You may reclaim tax from HM Revenue & Customs if the amount of tax we have taken off is more than you have to pay

.... as the 20% is the rate specified in the TDSI (Tax Deduction Scheme for Interest) scheme ....... it's a bit of wriggling by Halifax I've never understood the rationale for. (But they do have a bit of history with HMRC, in this respect, as I remember there being issues with the payover of the 22% (?) deductions some 20+ years ago!)
I think HMRC would much prefer R85s to R40s (for such modest amounts - as most claimants will R85 their other accounts?) ...... as being less work for them? I mused similarly a while ago! :

http://forums.moneysavingexpert.com/showpost.html?p=16722437&postcount=27

blueberrypie

Mikeyorks wrote: »

.... as the 20% is the rate specified in the TDSI (Tax Deduction Scheme for Interest) scheme .......

It's also the basic rate of income tax.

Mikeyorks

blueberrypie wrote: »

It's also the basic rate of income tax.

Indeed it (currently) is. But when they say :-

This means we pay it after taking off income tax at the rate set by law (currently 20%).

.................. that refers to TDSI. As that's where the legislation is brigaded for deposit takers who pay interest.