Tax on cashbacks/vouchers

ejv

Just curious to know about tax implication on the credit card cashbacks, Quidco cashbacks, M&S vouchers from SKY, £5 per month incentive by HALIFAX etc......etc.....

Should a self-employed declare these on tax return?

Does anyone on 40% tax bracket declare these?

I know these would be as minuscule as the mass of earth in Milky Way.....pedantically, should these be declared?:o

anselld

In the case of Halifax Reward Current Account, the £5 is actually £6.25 less 20% tax. It should be declared in the same way as interest taxed at source, ie a 40% taxpayer must pay the extra tax. Other cashbacks dunno.

jimmo

The principle is quite simply that if income arises from business activities it is taxable. If the income arises from something else it is not.

If you are a plumber and buy your trading stock using a cash back credit card, the cash back is a discount on your trade purchases and needs to be reflected as such in your accounts so you will effectively pay tax on the cash back.

If, whilst you are working in your customer’s home and over a cup of tea, you come to an agreement that you will nominate your customer to Sky so that you will receive M&S vouchers when they sign up that is nothing to do with your business and is not taxable.

However, if you make a habit of signing up your plumbing customers to Sky HMRC would then regard your business as “plumber and Sky agent”.

Savvy_Sue

anselld wrote: »

In the case of Halifax Reward Current Account, the £5 is actually £6.25 less 20% tax. It should be declared in the same way as interest taxed at source, ie a 40% taxpayer must pay the extra tax. Other cashbacks dunno.

The Santander 123 account pays both interest and cashback. These are listed separately on your statement. The interest has had tax deducted, and the cashback hasn't.

anamenottaken

jimmo wrote: »

The principle is quite simply that if income arises from business activities it is taxable. If the income arises from something else it is not.

If you are a plumber and buy your trading stock using a cash back credit card, the cash back is a discount on your trade purchases and needs to be reflected as such in your accounts so you will effectively pay tax on the cash back.

If, whilst you are working in your customer’s home and over a cup of tea, you come to an agreement that you will nominate your customer to Sky so that you will receive M&S vouchers when they sign up that is nothing to do with your business and is not taxable.

However, if you make a habit of signing up your plumbing customers to Sky HMRC would then regard your business as “plumber and Sky agent”.

If it is a discount as you say, it is not income. Why would you pay tax on it?

dtaylor84

It would reduce your allowable expenses, and so increase your taxable income.