Is Halifax Reward classed as interest?

hillwalker2004

LittleVoice wrote: »

[
I believe the non-tax payer can reclaim from HMRC - but a bit of a nuisance to have to do so.

They can claim from HMRC, but only if Halifax paid the £5 after tax has been deducted. If you have filled in the relevant form to Halifax to declare yourself as a non tax payer and they still pay you £5 then you need to establish whether:
a) they have ignored your form and still paid the £5 net of tax or
b) they have paid you £5 gross

I would guess its highly likely that a) above would apply. Otherwise it would be to the account holders advantage not to voluntarily declare to Halifax as a non tax payer and then be able to reclaim the additional £1.25 from HMRC.

Funkyfreddy

Rob_192 wrote: »

Just filling in my tax return - does anyone know if the £5 per month received on Halifax Reward current accounts is classed as interest? I'm assuming it is, but just wanted to check.

As others have suggested it is a payment to you (Income) of £6.25 less Tax at the basic rate of 20% which results in a net credit to your account of £5.00

It is not interest though.

You cannot make use of an R85 to receive the "Payment" gross as you could if it were interest calculated on the balance of an account and you fulfilled the requirements of the R85.

For your Tax Return (SA100) I would think it should be included under "Other UK Income" with Box 16 at n months x £6.25 and Box 18 at n months x £1.25.

These figures will then be taken into consideration in the final calculation for any under or overpayment of tax on your income depending on your personal situation.

Admittedly whether classed as Interest or Income the end result will be the same – you have paid the basic rate of tax on an gross income of £6.25 in any month it was credited to your account.


FF

Funkyfreddy

hillwalker2004 wrote: »

Halifax pay only the £5 (which is what the advertise they pay). Even if the account holder has registered with them that they are a non-tax payer, Halifax still pay £5.

I can't see it now but the Halfax website used to make mention of the fact that the R85 could not be used to receive the payment gross.

If you are a non taxpayer then through your tax return or by completing a R40 you can reclaim any tax paid (...and in a slight contradiction the R40 is for claiming ay overpayment of tax on interest !)

FF

hillwalker2004

Funkyfreddy wrote: »

As others have suggested it is a payment to you (Income) of £6.25 less Tax at the baisc rate of 20% which results in a net credit to your account of £5.00


It is not interest though.

You cannot make use of an R85 to receive the "Payment" gross as you could if it were interest calculated on the balance of an account and you fulfilled the requirements of the R85.

For your Tax Return (SA100) I would think it should be included under "Other UK Income" with Box 16 at n months x £6.25 and Box 18 at n months x £1.25.

These figures will then be taken into consideration in the final calculation for any under or overpayment of tax on your income depending on your personal situation.

Admittedly whether classed as Interest or Income the end result will be the same – you have paid the basic rate of tax on an gross income of £6.25 in any month it was credited to your account.


FF

Agree which probably explains the why the R85 would be ignored. As you rightly say it would make little difference for most, but not all people so what you say is not strictly true. For example the 10% savings bracket does still exist if you earn just above the personal allowance (2,320 in 09/10). However if treated as 'other income' it would be taxed at 20%. Also depending upon how it is classified it could affect what you are allowed to contribute to your pension, but for 99.9% of the populace having a Halifax account this isnt going to make any difference!

oldfella

if you submit an R40 add £75 to the before tax and £60 to after tax numbers

marvin

cashbackproblems wrote: »

when do you get this £5 and how long does the 1k need to be in the account? iv just transferred 1k in and nothing showing yet?

As no-one seems to have answered

Seconds and within 3 days of the 1st of the next month.

So your £1000 this month will become £5 by the 4th of June then it starts again.

You can literally move it straight in and straight back out again.

LittleVoice

marvin wrote: »

As no-one seems to have answered

Seconds and within 3 days of the 1st of the next month.

So your £1000 this month will become £5 by the 4th of June then it starts again.

You can literally move it straight in and straight back out again.

I think your post confirms post #9

jem16

hillwalker2004 wrote: »

They can claim from HMRC, but only if Halifax paid the £5 after tax has been deducted.

Halifax class it as a "Reward" so everyone is paid the £5 regardless of tax status. However you will have to pay more if a higher rate taxpayer or reclaim from HMRC if you don't pay tax.

From the Halifax website.

http://www.halifax.co.uk/bankaccounts/current-accounts/ultimate-reward-current-account/

"Pay in £1,000 per calendar month to receive the £5 Reward payment. The £5 Reward payment is paid 'net' of income tax. This means we pay it after taking off income tax at the rate set by law (currently 20%). If you're a higher-rate taxpayer, you may have to pay extra income tax on the reward payment. The amount before we take off income tax is £6.25. You may reclaim tax from HM Revenue & Customs if the amount of tax we have taken off is more than you have to pay."

marvin

LittleVoice wrote: »

I think your post confirms post #9

Quite right missed that

elektra

I wondered this last year but did not bother as had only 1 £5 payment.

This year I again have to submit an R40 ( bit late in submitting an R85) so interested in the answer as £15 involved.

I thought I would search Halifax site for requesting a tax certificate but any help references to it just point you to a saving account.

I thought I'd go this route as if it shown on tax certificate I would definitely claim it.