Halifax Reward and the new Tax free Savings

grumbler

blink18 wrote: »

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

Why? Just because they are paid monthly, not annually? If so, this reasoning makes no sense really as it doesn't matter how often the payments are made. Similarly to the interest that is/was taxed the same regardless of being credited monthly or annually.

noh

blink18 wrote: »

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.

The Halifax Reward payment is an "Annual Payment" as defined in the HMRC rules.
http://www.hmrc.gov.uk/manuals/saimmanual/SAIM8020.htm

It always has been and continues to be so.
Income tax at a rate of 20% will continue to be deducted at source.
Higher rate tax payers need to pay additional tax. Zero rate taxpayers can reclaim the tax paid from HMRC.

blink18

noh wrote: »

The Halifax Reward payment is an "Annual Payment" as defined in the HMRC rules.
http://www.hmrc.gov.uk/manuals/saimmanual/SAIM8020.htm

It always has been and continues to be so.
Income tax at a rate of 20% will continue to be deducted at source.
Higher rate tax payers need to pay additional tax. Zero rate taxpayers can reclaim the tax paid from HMRC.

that link doesn't say in any way that monthly paid rewards could on any way constitute an 'annual payment'

YorkshireBoy

blink18 wrote: »

that link doesn't say in any way that monthly paid rewards could on any way constitute an 'annual payment'

The very first sentence in that link says that an 'annual payment' is not defined in legislation (ergo it doesn't need to be an annual payment, so it can be a monthly (or even weekly) payment). Instead, it's meaning comes from case law, which has established that providing a payment meets 4 characteristics it may be termed, and dealt with as, an annual payment.

So, does the monthly Reward payment meet all 4 'characteristics' shown? If it does, then it's an 'annual payment' insofar as determining whether it's taxed or not. Wouldn't you agree?

grumbler

blink18 wrote: »

that link doesn't say in any way that monthly paid rewards could on any way constitute an 'annual payment'

Neither does it say that it has to be paid once a year:

For example, a university student might receive a regular termly contribution from his or her parents towards living expenses. This is not an annual payment, because there is no legal obligation to make the contribution.

I.e. a regular termly payment could be classed as 'annual' if there was a legal obligation.

where_are_we

Following a recent switch to a Halifax Reward account and an attempt to submit an R85 claim form as a non-taxpayer in order to get a "gross" reward the following was received -
"Unfortunately, we are unable to refund any tax paid on the reward value credited to your account as this is a reward payment and not interest paid on funds held in your account.
In order to reclaim the tax already deducted from the reward you will need to wait until the end of each tax year and complete the enclosed R40 claim form and send to HMRC.
Each year you will receive an Annual Interest Summary, and you will need this information in order to complete the claim form."
Strange that the "reward payments" will be included in an "Annual Interest Summary" when they are "not interest paid on funds". It looks like the £5 reward will continue after April and not rise to £6.25.

Ed-1

where_are_we wrote: »

It looks like the £5 reward will continue after April and not rise to £6.25.

...which may be a blessing in disguise as it makes Halifax less inclined to tinker with it to make it a £5 'gross' reward and 'pocket' the extra tax that would have been paid instead of passing it on to savers. I find it hard to believe that the account would have remained as it is had the reward counted towards the personal savings allowance and thus been paid gross to everyone - £6.25 a month hardly has the same advertising ring to it does it.

Dan83

I can't see the Halifax passing the saving onto the customer, the account is advertised as giving a £5 reward, not £6.25 before tax

Ed-1

Dan83 wrote: »

I can't see the Halifax passing the saving onto the customer, the account is advertised as giving a £5 reward, not £6.25 before tax

Good job they won't have to then isn't it.

noh

Dan83 wrote: »

I can't see the Halifax passing the saving onto the customer, the account is advertised as giving a £5 reward, not £6.25 before tax

There is no saving to pass on.
They will continue to pay £5 to the customer and £1.25 to HMRC