Cashback and declaring for income tax

Meri

Hi all, I have searched the main site and the forum for an answer to my question but cannot find one so could one of you assist please?


Does cash back received from banks like Santander 123 account have to be declared for tax purposes?


I am new to this as never had any income to declare for tax purposes but due to inheritance I now have capital and use the various accounts to get the maximum interest I can which as not tax payer do not get tax on interest taken at source but assume I have to declare on tax return although way below tax allowance.


But not sure if Cashback also should be declared.


Does it?


Thanks for any guidance.

atypical

Cashback is not taxable as it's treated as a discount on the goods/services purchased.

Can't find an HMRC source but found this:
http://www.telegraph.co.uk/finance/personalfinance/borrowing/creditcards/10027264/Will-I-have-to-pay-tax-on-credit-card-cashback.html

A [HMRC] 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."

bigadaj

atypical wrote: »

Cashback is not taxable as it's treated as a discount on the goods/services purchased.

Can't find an HMRC source but found this:
http://www.telegraph.co.uk/finance/personalfinance/borrowing/creditcards/10027264/Will-I-have-to-pay-tax-on-credit-card-cashback.html

A [HMRC] 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."

Which is interesting given that rebates on charges for investment accounts are taxable. I also udnerstood that tax is payable on things like the halifax reward fiver per month, though is paid net of basic rate tax.

xylophone

http://www.halifax.co.uk/bankaccounts/current-accounts/reward-current-account/
"The £5 reward will be paid each month if you pay in £750 or more, pay two different direct debits and remain in credit throughout the previous calendar month. This payment is ‘net’ of income tax, which 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 gross amount is £6.25 - this is the amount before income tax is taken off."

So if you are a non-tax payer or are entitled to 10% rate on savings income you claim a refund from HMRC?

noh

The Halifax Reward and commission rebates are what HMRC calls "annual payments" and are taxable.
Cahbacks that are given by credit card and bank accounts are not taxable.
Read about it here
http://www.hmrc.gov.uk/manuals/saimmanual/saim8000.htm

http://www.telegraph.co.uk/finance/personalfinance/investing/9953193/HMRC-to-tax-fund-cashback-from-next-week.html

scragend

xylophone wrote: »

http://www.halifax.co.uk/bankaccounts/current-accounts/reward-current-account/
"The £5 reward will be paid each month if you pay in £750 or more, pay two different direct debits and remain in credit throughout the previous calendar month. This payment is ‘net’ of income tax, which 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 gross amount is £6.25 - this is the amount before income tax is taken off."

So if you are a non-tax payer or are entitled to 10% rate on savings income you claim a refund from HMRC?

Yes, you can.

Meri

Thanks for info folks, interesting issue ��

So just need to declare the interest although way below tax threshold.

Thanks all
Meri