Tax on Cash Back?

CathA

sleepless_saver wrote: »

Halifax deduct tax from their Reward cashback at source, and their website points out that you may be liable for more tax if you pay higher rate tax. I wonder if you could reclaim the tax from HMRC if you're not a taxpayer?

I have, twice!

cinereus

sleepless_saver wrote: »

Halifax deduct tax from their Reward cashback at source, and their website points out that you may be liable for more tax if you pay higher rate tax. I wonder if you could reclaim the tax from HMRC if you're not a taxpayer?

Really? I don't think I've been taxed on it?

jem16

cinereus wrote: »

Really? I don't think I've been taxed on it?

If you receive £5 per month then yes you have been taxed on it just like everyone else. That's the way the reward is paid.

cinereus

jem16 wrote: »

If you receive £5 per month then yes you have been taxed on it just like everyone else. That's the way the reward is paid.

So the £5 is net meaning it was originally more?

jem16

cinereus wrote: »

So the £5 is net meaning it was originally more?

It was always £5.

Technically Halifax see it as a reward but HMRC see it as income.

If you're a higher rate taxpayer, then you have to use £6.25 as the gross payment and will have to pay an extra £1.25 in tax.

If you're a basic rate taxpayer, then nothing more needs to be done.

If you're a non-taxpayer, it will still be paid as £5 but you can claim back the tax from HMRC.

noh

cinereus wrote: »

So the £5 is net meaning it was originally more?

As stated on the Halifax website, linked to in a previous post, "The gross amount is £6.25 - this is the amount before income tax is taken off."

System

jem16 wrote: »

It was always £5.
....
If you're a higher rate taxpayer, then you have to use £6.25 as the gross payment and will have to pay an extra £1.25 in tax.

That doesn't make sense.
£6.25 is more than £5.00