Barclays Blue Rewards - HMRC treatment

prixon

Has anyone been given a definitive position on how Barclays "Blue Rewards" payments (£7 reward - £3 fee) are treated by HMRC for tax purposes?


I have seen plenty of posts containing speculation on possible interpretations but this doesn't really help much. Presumably by now some people will have needed to include such payments in their self-assessment tax returns, so I'm wondering if a clear position has been obtained through enquiry from HMRC? (or are you still waiting in the call centre queue?).


Barclays themselves are no help. They say that payments "may be subject to income tax and you may need to declare them". In other words, they don't know and can't be bothered to find out?


I'm interested in which box on tax returns people mentioned these payments (if at all) and how they were subsequent taxed. For example, did they offset the fee and declare the rest as untaxed "other" income?


Also as they're not interest I'm assuming that they won't contribute towards the tax free savings bands being introduced in April... But may still be taxable regardless of other income.

colsten

I believe they are ans will remain to be taxable income, like the Halifax Reward payments are. You have them paid net after 20% tax, so unless you are a higher/advanced tax payer, you owe no further tax. If you are not a tax payer, you can claim back the tax you paid by filling in an R40.

I just added my Halifax Reward Payments to my interest in previous self assessments, and will do so again for the 2015-16 assessment. No idea yet how to handle them in the 2016-17 self assessment - I'll cross that bridge when I come to it.

grumbler

colsten wrote: »

I believe they are ans will remain to be taxable income, like the Halifax Reward payments are. You have them paid net after 20% tax, so unless you are a higher/advanced tax payer, you owe no further tax.

masonic wrote: »

...It seems at least some of that £7 should be taxable, doesn't it... and on checking it does state in the Additional Conditions:

The rewards that you’ll receive for being part of Barclays Blue Rewards may be subject to income tax and you may need to declare them to H M Revenue & Customs.

So perhaps too complicated for Barclays to work it out, so they leave it up to the customer to do the right thing?

......................

prixon

I'm aware of previous posts on the same subject but none of them help because they are just opinions about possible interpretation rather than confirmation of a clear position.
Halifax Rewards and Barclays Blue Rewards don't seem to be treated quite the same. Halifax explicitly say their reward is paid net of basic rate tax whereas Barclays seem to imply theirs is a gross payment (though it's not entirely clear).
The Halifax Reward seems to meet the HMRC criteria of an "annual payment" (discussion thread elsewhere) whereas Barclays is more complicated with a fee requirement (so is some of the payment effectively a discount on the fee?).
Just seems strange that seemingly nobody has got the answer.

grumbler

Well, even our MSExpert doesn't know:

Barclays doesn't tax the rewards, but customers should check if they need to declare anything as income tax

http://www.moneysavingexpert.com/news/banking/2015/04/barclays-launches-reward-scheme-for-current-account-users-but-other-banks-beat-it

vadasz

I also have been searching for an answer to this question for a while.

The person at my Barclays branch found an answer online, she copied it out for me without the link. The note says:

"£7 - subject to income tax. £3 - reward fee should not be offset against £7 for income tax purposes".

This version is supported by the calculation in an online Telegraph article published in May 2016, although I remember finding articles elsewhere assuming that only the £4 income is taxable.

I used the Barclays telephone service to ask where I could find a definite answer written down, and whether it was true that the whole £7 is taxable not just the £4 income. The reply was that I should call HMRC, and they would tell me what to do.

Then I called HMRC. The person I talked to has never heard of Barclays Blue Rewards, and his view was that I do not have to pay tax on this cashback.

grumbler

It's "reward" not cashback...

Dird

grumbler wrote: »

It's "reward" not cashback...

You pay £3 and get £7 back...it's just a very generous cashback

vadasz

In the conversation with HMRC I described how the reward works and what I was told at the Barclays branch. Still, this tax man used the word cashback even though it is not, and said that it is a tiny sum and I don't need to declare it.

I only reported here the various answers I had received so far without arriving at a conclusion. It is likely that different advisers will give different answers.

xylophone

This version is supported by the calculation in an online Telegraph article published in May 2016, although I remember finding articles elsewhere assuming that only the £4 income is taxable.

http://www.telegraph.co.uk/personal-banking/current-accounts/the-barclays-loyalty-reward-thats-half-of-what-was-promised/

vacheron

I received the official Barclays letter today stating that the £7 reward is indeed taxable, but the other rewards are not.

It also confirms that the £3 monthly fee is NOT deductible,

So for a higher rate taxpayer:

(Reward - 40% tax - fee) = (£7 - £2.80 - £3) = £1.20!

... Plus many people may now have to fill in a self assessment just because of this piddling amount. :mad:

Thanks Barclays!