Halifax Reward and the new Tax free Savings

michaels

Oops - I have always put it down as savings income on the tax return - DW getting back the tax on £240 and me paying the uplift to 40% on 180.

masonic

michaels wrote: »

Oops - I have always put it down as savings income on the tax return - DW getting back the tax on £240 and me paying the uplift to 40% on 180.

Up to this point, it doesn't make a difference to the calculation, but from the next tax year putting it down as savings income may result in it being treated as being received gross (so you'd end up worse off than you should).

colsten

King_Of_Fools wrote: »

I wonder if Halifax are considering changing the model to an interest based one because as your say it used to make no difference to us or them but now there could be a tax saving for us and an admin saving for them.

Easiest for Halifax would be to ditch the fivers altogether. Hopefully they won't do that.

zagfles

masonic wrote: »

Up to this point, it doesn't make a difference to the calculation, but from the next tax year putting it down as savings income may result in it being treated as being received gross (so you'd end up worse off than you should).

It certainly does make a difference if you're in the nil band for savings ie earn between £10600 and £15600 this tax year. You pay no tax on interest but you do pay tax on "annual payments".

masonic

zagfles wrote: »

It certainly does make a difference if you're in the nil band for savings ie earn between £10600 and £15600 this tax year. You pay no tax on interest but you do pay tax on "annual payments".

Good point.

keiran

I assumed that the reward was classed as interest, as Halifax provide an annual summary for the tax year, giving figures for "gross reward, tax deducted and net reward paid" - to all intents and purposes this is the "Statement of Deduction of Tax for the purpose of section 975 of the Income Tax Act 2007" that all banks/building societies provide every year

Vortigern

zagfles wrote: »

You pay no tax on interest but you do pay tax on "annual payments".

...unless you've mistakenly included your Halifax Reward in the total of interest from which tax has been deducted on form R40

zagfles

Vortigern wrote: »

...unless you've mistakenly included your Halifax Reward in the total of interest from which tax has been deducted on form R40

An easy mistake to make - see post #38.

JRG

My wife is a non-taxpayer. In the past the Halifax Rewards figures have been included within the Savings Interest in her Tax Form, and she has had the income tax refunded.
If Halifax continue to pay the £5 reward as a NET amount then the figures will have to be included in Other Income in her Tax Form to enable the income tax to be refunded.
It's about time that Halifax clarified the situation for their Reward account customers.

Archi_Bald

[QUOTE=JRG;70490184
It's about time that Halifax clarified the situation for their Reward account customers.[/QUOTE]

What do you want them to clarify? What did they tell you when you asked them?

There has always been a clear distinction between interest and reward payments. Here are some extracts from the Halifax T&Cs:

*£5 reward paid ..............
<snip>
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.

The £5 reward 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
monthly amount is £6.25. Tax amounts may change in the future.

. We are not allowed to pay reward payments gross

£5. 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.)