Are Cashback payments taxable?

macrow

I have a Santander 123 current account and credit card. Both pay 'cashback'.
Should I declare the cashback amounts on my tax return in the same way that I would with interest earned?
I rang Santander and the guy that took the call said no-one had ever asked this question before, and he didn't seem at all confident about it, first of all telling me that tax had already been deducted, then that the payment was an 'award' and therefore not taxable.
If tax HAS been deducted at source, could I claim it back? (as a non-taxpayer).
Does anyone have any thought on this?

[Deleted User]

It's not taxable.

anamenottaken

The cashback is not treated as interest but as a return of some of your own money, a belated discount from the price. Therefore there is no tax to be paid, nor tax to be reclaimed.

Andrew_Cottrell

macrow wrote: »

I have a Santander 123 current account and credit card. Both pay 'cashback'.
Should I declare the cashback amounts on my tax return in the same way that I would with interest earned?

My understanding is a 'cashback' or 'reward' in a current account is classed as savings income, and would already have 20% basic rate income tax deducted. Higher-rate-tax payers would need to declare the income and pay the outstanding tax. Non-tax payers can complete form R85 to claim back the tax.

Biggles

Andrew_Cottrell wrote: »

My understanding is a 'cashback' or 'reward' in a current account is classed as savings income, and would already have 20% basic rate income tax deducted. Higher-rate-tax payers would need to declare the income and pay the outstanding tax. Non-tax payers can complete form R85 to claim back the tax.

No, there is no taxation element.

A recent Telegraph article said, We put Hargreaves' claim to HMRC. They dismissed it as "nonsense". A spokesman said: "There is no question of tax becoming payable on cashbacks received from credit, debit and loyalty cards or any other kind of cashback payment."
http://www.telegraph.co.uk/finance/personalfinance/borrowing/creditcards/10027264/Will-I-have-to-pay-tax-on-credit-card-cashback.html

macrow

That's good news!
Thanks to everyone that responded to my query, particularly Andrew for saying that I could claim the tax back on an R85 for the 'cashbacks' on my current account!
It's not going to be a huge amount but every penny helps when cash is tight!
Mark

roonaldo

Not taxable, they are considered discount on the goods/services.

macrow

Biggles wrote: »

No, there is no taxation element.

A recent Telegraph article said, We put Hargreaves' claim to HMRC. They dismissed it as "nonsense". A spokesman said: "There is no question of tax becoming payable on cashbacks received from credit, debit and loyalty cards or any other kind of cashback payment."

Doh! That rather 'muddies the water'!

opinions4u

macrow wrote: »

That's good news!
Thanks to everyone that responded to my query, particularly Andrew for saying that I could claim the tax back on an R85 for the 'cashbacks' on my current account!
It's not going to be a huge amount but every penny helps when cash is tight!
Mark

If you're referring to Halifax fivers you'll need an R40.

Andrew_Cottrell

Biggles wrote: »

No, there is no taxation element.

A recent Telegraph article said, We put Hargreaves' claim to HMRC. They dismissed it as "nonsense". A spokesman said: "There is no question of tax becoming payable on cashbacks received from credit, debit and loyalty cards or any other kind of cashback payment."
http://www.telegraph.co.uk/finance/personalfinance/borrowing/creditcards/10027264/Will-I-have-to-pay-tax-on-credit-card-cashback.html

Thanks for the information. There must be some fine-detail here, otherwise Halifax could re-brand their 'reward' as a 'cashback' and it would become non-taxable.

‘Cashbacks’ can present difficult issues, and HMRC staff should consult CTIAA (Financial Products Team) in cases of doubt.
Customer rewards and ‘cashback’