Halifax Reward and the new Tax free Savings

Katiehound

Out of curiosity just phoned Halifax..... when I pressed the *0 key: voice said "and what do you wish to speak with us about?" I answered "Reward" which the automated system interpreted as "Fraud!!"
I digress: answer to the question is that situation after April 6th will not change- Reward will stay at £5.
(Shame I had banked on £6.25!!)

Mrs_Arcanum

Katiehound wrote: »

Out of curiosity just phoned Halifax..... when I pressed the *0 key: voice said "and what do you wish to speak with us about?" I answered "Reward" which the automated system interpreted as "Fraud!!"
I digress: answer to the question is that situation after April 6th will not change- Reward will stay at £5.
(Shame I had banked on £6.25!!)

A nice saving for the Halifax then!

ceredigion

Mrs_Arcanum wrote: »

A nice saving for the Halifax then!

No it's not, they still will give the chancellor £1.25. If you do not pay income tax you can claim it back.

Biggles

grumbler wrote: »

They credit it net of tax, that doesn't mean that it's interest.

No, but Halifax have always treated it in the same way as interest and it does mean it's taxable income of £6.25.

As such, it must be part of our Personal Allowance or our Personal Savings Allowance.

The gov.uk website doesn't actually mention interest, it just says 'From April 2016, the new Personal Savings Allowance means that basic rate taxpayers will not have to pay tax on the first £1,000 of savings income they receive and higher rate taxpayers will not have tax to pay on their first £500 of savings income.' But is this 'savings income'? Possibly not, it's not a savings account, but it is income from a bank account.

Maybe this is something Halifax have to sort out with HMRC.

Ed-1

Biggles wrote: »

No, but Halifax have always treated it in the same way as interest and it does mean it's taxable income of £6.25.

As such, it must be part of our Personal Allowance or our Personal Savings Allowance.

The gov.uk website doesn't actually mention interest, it just says 'From April 2016, the new Personal Savings Allowance means that basic rate taxpayers will not have to pay tax on the first £1,000 of savings income they receive and higher rate taxpayers will not have tax to pay on their first £500 of savings income.' But is this 'savings income'? Possibly not, it's not a savings account, but it is income from a bank account.

Maybe this is something Halifax have to sort out with HMRC.

See page 14 of this HMRC consultation on implementation of the personal savings allowance (PSA) - tax deduction scheme for interest (TDSI):

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/444945/Deduction_of_income_tax_from_savings_income_-_implementation_of_the_Personal_Savings_Allowance.pdf

3.28 Royalties and annual payments are not savings income and will not therefore come within the scope of the PSA. They are nonetheless subject to deduction of income tax at source, under rules in Part 15 ITA 2007, similar to those applying to yearly interest.

3.29 Annual payments are payments of a recurring nature made under a legal obligation, and which provide ‘pure income profit’. There is an extensive body of case law on annual payments, which cover a wide range of types of financial payment. Some payments made by banks and building societies, such as certain kinds of reward payment for opening and holding an account, and some payments by collective investment schemes, are annual payments. Following the end of deductions under TDSI, banks and building societies will therefore, if current rules continue, have to deduct tax from annual payments associated with savings and deposit accounts. This may be confusing for customers and burdensome for payers in cases where tax is deducted from annual payments to an account but not from interest on sums held in that account.

If you see the government response to the consultation, they decided not to make any changes to the deduction of tax from non-TDSI payments such as the Halifax reward.

Katiehound

ceredigion wrote: »

No it's not, they still will give the chancellor £1.25. If you do not pay income tax you can claim it back.

How?
A friend of mine doesn't pay income tax, has filled in the relevant bank form (or so she says) and still receives £5.
Something a little odd here!

Ed-1

Katiehound wrote: »

How?
A friend of mine doesn't pay income tax, has filled in the relevant bank form (or so she says) and still receives £5.
Something a little odd here!

The gross reward payment is £6.25. You can't get that paid into your account. It's taxed for everyone. So everyone gets £5. However if you don't pay income tax, you can get the £1.25 a month in tax back from HMRC.

colsten

Halifax are not allowed, by law, to pay reward payments gross. See the T&Cs.

Biggles

Ed-1 wrote: »

This may be confusing for customers and burdensome for payers in cases where tax is deducted from annual payments to an account but not from interest on sums held in that account.

They were certainly right about one thing!

blink18

Ed-1 wrote: »

See page 14 of this HMRC consultation on implementation of the personal savings allowance (PSA) - tax deduction scheme for interest (TDSI):

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/444945/Deduction_of_income_tax_from_savings_income_-_implementation_of_the_Personal_Savings_Allowance.pdf

3.28 Royalties and annual payments are not savings income and will not therefore come within the scope of the PSA. They are nonetheless subject to deduction of income tax at source, under rules in Part 15 ITA 2007, similar to those applying to yearly interest.

3.29 Annual payments are payments of a recurring nature made under a legal obligation, and which provide ‘pure income profit’. There is an extensive body of case law on annual payments, which cover a wide range of types of financial payment. Some payments made by banks and building societies, such as certain kinds of reward payment for opening and holding an account, and some payments by collective investment schemes, are annual payments. Following the end of deductions under TDSI, banks and building societies will therefore, if current rules continue, have to deduct tax from annual payments associated with savings and deposit accounts. This may be confusing for customers and burdensome for payers in cases where tax is deducted from annual payments to an account but not from interest on sums held in that account.

If you see the government response to the consultation, they decided not to make any changes to the deduction of tax from non-TDSI payments such as the Halifax reward.

why are you selectively quoting? that quote says something entirely different when you remove your bold parts and read the entire paragraph as a whole.

The reward payment isn't an annual payment, so the quote doesn't apply to it.