Halifax Reward and the new Tax free Savings

Simon7685

I have just skimmed through this thread, so apologies if this has already been asked and answered. What is the situation if you do not earn enough to pay tax and don't use the full £1k of the personal savings allowance? Are you entitled to get the £1.25 refunded from HMRC or not?

Normally when I send my self assessment in I include the bit of interest I get and they refund the tax I have paid on it. So should I include the Reward Payments in my tax return and does anyone know what it goes down as?

Thanks in advance

polymaff

Simon7685 wrote: »

I have just skimmed through this thread, so apologies if this has already been asked and answered. What is the situation if you do not earn enough to pay tax and don't use the full £1k of the personal savings allowance? Are you entitled to get the £1.25 refunded from HMRC or not?

Normally when I send my self assessment in I include the bit of interest I get and they refund the tax I have paid on it. So should I include the Reward Payments in my tax return and does anyone know what it goes down as?

Reward payments, by Halifax, Barclays or whoever, are not interest payments. You report them, along with any tax deducted as "other income". You'll only get a tax refund if your other total taxable non-savings income (i.e. earnings, pensions, taxable benefits) does not exceed your personal allowance.

changearound

Simon7685 wrote: »

I have just skimmed through this thread, so apologies if this has already been asked and answered. What is the situation if you do not earn enough to pay tax and don't use the full £1k of the personal savings allowance? Are you entitled to get the £1.25 refunded from HMRC or not?

Normally when I send my self assessment in I include the bit of interest I get and they refund the tax I have paid on it. So should I include the Reward Payments in my tax return and does anyone know what it goes down as?

Thanks in advance

Reward payments should be included in the 'Other Uk Income Not Included On Supplementary Pages' bit of the SA return.

For Halifax Rewards the gross figure is £6.25 per month, £1.25 of which is tax.

For Co-op Everyday Rewards the gross figure is £5 per month, £1 of which is tax. ( I assume the 5p per debit card use is regarded as cashback and therefore does not need to be included in the tax returm).

Barclays Blue Rewards are paid gross with the amount varying depending on what services Barclays provide you with. For a bog standard current account user it's £7 per month with the £3 fee being classed as an allowable expense.

The new Personal Savings Allowance is irrelevant to these payments - they are not interest. If your income is below the Personal Allowance (£10600 last year, £11000 this year) HMRC owe you the tax back from the Halifax/Co-op Rewards.

If you're a basic rsate tax payer you owe HMRC 20% of your Barclays Blue Reward profit.

If you're a higher rate tax payer you owe HMRC 40% of your Barclays Blue Reward profit. and the extra 20% of your Halifax/Coop rewards.

MJ12

changearound wrote: »

Barclays Blue Rewards are paid gross with the amount varying depending on what services Barclays provide you with. For a bog standard current account user it's £7 per month with the £3 fee being classed as an allowable expense.

The £3 fee being classed as an allowable expense would be great if that is true, but how did you arrive at that? I can't find anything anywhere that verifies this.

If Barclays Blue Rewards fee is an allowable expense, surely the Santander 123 account fee would qualify as an allowable expense too.

It would be great if its true. :cool:

polymaff

MJ12 wrote: »

The £3 fee being classed as an allowable expense would be great if that is true, but how did you arrive at that? I can't find anything anywhere that verifies this.

If Barclays Blue Rewards fee is an allowable expense, surely the Santander 123 account fee would qualify as an allowable expense too.

It would be great if its true. :cool:

SA150: Expenses "you had to spend solely to earn the income"

The interpretation of "solely" might be a lawyer's delight, but the default situation for the Barclays Reward is that you get the £7 and nothing else, whereas with the 123 account other benefits accrue by default. Hence Barclays: yes; Santander 1-2-3: no.

changearound

On the SA Tax Return there isn't a box for expenses in the Interest section so I presume you can't claim against the 123 £5 even though you can't get the interest without paying the fee.

In the Other Income bit however, there is an expenses box and what else would you describe the Blue Reward £3 fee as?

If you were taxed on the full £7 at 20% then charged the £3 fee you'd end up with £2.60, ameasly 65% of the £4 profit which, at a purely intuitive level, doesn't seem right.

It's a great pity that Barclays chose to set up such an opaque system but then again it's free money so it would be churlish to complain too vociferously.

MJ12

That's a good point. Santander 123's is interest and Blue Reward is income.

youngretired

Hello


I am new to posting but saw this thread and just wanted to answer what I myself did and have found out.


With regards to Halifax rewards I have claimed my tax back via a R40 and put it in as interest and HMRC paid me it back OK (I am a non taxpayer).


My sister is self employed (basic taxpayer) and has to complete a self assessment form and has just opened a Barclays Blue Reward account. After reading this thread she contacted HMRC to find out if she needs to pay tax on the rewards and where to put it. They told her that NO she does not need to pay tax on the reward and also there is no place on the form to put rewards as this is not interest or other income. She did mention reading this forum.


The member of staff checked with the tech team and they also confirmed that Barclays Blue rewards are not taxable at present as nowhere to put on the self assessment form.


If you need to complete a self assessment form I would say that it is best to check with them first, then at least if advised wrong you would have a member of staff's name.

polymaff

youngretired wrote: »

... she contacted HMRC to find out if she needs to pay tax on the rewards and where to put it. They told her that NO she does not need to pay tax on the reward and also there is no place on the form to put rewards as this is not interest or other income. She did mention reading this forum.


The member of staff checked with the tech team and they also confirmed that Barclays Blue rewards are not taxable at present as nowhere to put on the self assessment form.


If you need to complete a self assessment form I would say that it is best to check with them first, then at least if advised wrong you would have a member of staff's name.

... and get it confirmed in writing.

Classic HMRC.

me_and

For a payment to be an annual payment, according to HMRC's SAIM8020, it needs to be "pure income profit", and SAIM8040 states it's critical "whether payments can be said to be made in return for something the recipient has provided, and has incurred expenditure on providing."

Barclays Blue rewards, unlike the Halifax rewards, are contingent on paying a fee, i.e. you have to incur expenditure to get the reward. As such, they're not pure profit, so they don't count as "annual payments". They don't (as best I can tell) fit into any other category of taxed income, either, so I think it's correct* that Barclays Blue rewards aren't taxed.

It does beg the question why Halifax don't just add a 1p fee and increase the reward to £5.01, thus removing the tax obligation...

(* "correct" with the meaning of "in accordance with HMRC guidance" rather than with the meaning of "makes any sense whatsoever".)