Reward Card (tax on a fiver)

Jamie11_2

Are the new tax rules going to affect Halifax reward cards that give £5 tax-free each month if £750 is paid in?
At the moment tax is deducted at source.

PeacefulWaters

HMRC have told Halifax to continue taxing it as they do now.

It isn't interest.

Dan83

The £5 is a reward, not interest.

Rewards are still taxed.

That is what I can gather from all the other posts I've seen about this, if I'm wrong someone will shortly be along to correct me.

ColdIron

I assume this also applies to Barclays Blue Rewards, interesting that they do not withhold tax

Flobberchops

Barclays stance IIRC is that individuals are responsible for counting Blue Rewards as income and declaring it if applicable.

olivetti

Flobberchops wrote: »

Barclays stance IIRC is that individuals are responsible for counting Blue Rewards as income and declaring it if applicable.

From my understanding of the legislation the Barclays Blue rewards cannot be an annual payment as an annual payment has to be pure income profit. I.e. there cannot be any costs involved in obtaining that profit/income. Because you have to pay Barclays in order to get the reward, it is a cost of that income and therefore not pure income profit and cannot be defined as an annual payment.

This stops Barclays having to deduct basic rate tax as per the requirements for interest and annual payments.

It is still taxable income, less the monthly cost of the account, but each account holder needs to declare this if they are a taxpayer.:rotfl:

Consumerist

Dan83 wrote: »

The £5 is a reward, not interest. . .

But Halifax has always stated that the payment is net of [Basic-rate] Income Tax and that higher-rate taxpayers will need to declare the Reward to HMRC and to pay any additional tax.

It seems to me that Halifax customers who receive less than £1,000 annual interest will now need to reclaim the overpayment from HMRC every year and those receiving more than £1,000 annual interest will need a tax certificate from Halifax.

olivetti

Consumerist wrote: »

But Halifax has always stated that the payment is net of [Basic-rate] Income Tax and that higher-rate taxpayers will need to declare the Reward to HMRC and to pay any additional tax.

It seems to me that Halifax customers who receive less than £1,000 annual interest will now need to reclaim the overpayment from HMRC every year and those receiving more than £1,000 annual interest will need a tax certificate from Halifax.

It is a reward.

It is not interest.

It is taxable income.

It is not covered by the £1000/£500 Personal Savings Allowance as it is not savings income by definition.

zolablue25

Consumerist wrote: »

It seems to me that Halifax customers who receive less than £1,000 annual interest will now need to reclaim the overpayment from HMRC every year and those receiving more than £1,000 annual interest will need a tax certificate from Halifax.

But if it isn't interest then surely, no matter how much interest they receive from elsewhere, they can't claim the tax back. They could only claim it back if it were interest (which it isn't).

I believe it is classed as earned income i.e. a "wage" in payment for using their bank services

Consumerist

zolablue25 wrote: »

But if it isn't interest then surely, no matter how much interest they receive from elsewhere, they can't claim the tax back. They could only claim it back if it were interest (which it isn't).

I believe it is classed as earned income i.e. a "wage" in payment for using their bank services

Ok. I see what you're getting at but does this mean the £5 payments will not count towards the £1,000/£500 personal savings allowance?

Edit
It occurs to me that these payments have not, in the past, shown up on any P60 as income.

savings_my_hobby

Consumerist wrote: »

Ok. I see what you're getting at but does this mean the £5 payments will not count towards the £1,000/£500 personal savings allowance?

I can't see why it should as we have paid tax on it already.