Reward Card (tax on a fiver)

diamonds

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

Well maybe we should sue en masse for not receiving 1 hour minimum wage a month. :cool: certainly at my tax rate it would be beneficial.

bowlhead99

diamonds wrote: »

http://www.thisismoney.co.uk/money/saving/article-3023407/Could-Halifax-Reward-customers-savings-tax-Budget-giveaway-snaffled.html


So LBG will ongoing be keeping the tax it used to pay HMRC... bar stewards.

No, the article is wrong.

Someone from the daily mail who doesn't understand the UK tax system has made an incorrect assumption.

The money Halifax pay you is not interest. You can have an average balance of £0.50 for the year as a whole and be sent £60 net of basic tax. You can have an average balance of £1 for the year and still be sent £60 net of basic tax. That is not an interest-based payment of 12000% p.a. net of basic tax relating to the money you lent them on a variable rate of interest which would magically decline to 6000% interest net of tax per year if your average balance increased to a pound. It is not interest at all. It is a fixed recurring income payment just like a royalty.

As a royalty-type payment, Halifax have to deduct 20% at source and any further tax is for the taxpayer to account directly to HMRC. As Halifax want to give you a fiver in your hand they agree to pay you 6.25 (or £75 a year if you qualify for the whole year) and withhold the basic rate tax on the payment.

If HMRC bring in a new savings allowance on interest income, this doesn't affect your liability to tax on the £75 a year, which is not interest income. Nor does it mean that Halifax are now trousering the £1.25 which they formerly paid to HMRC on your behalf. They are not simply going to pay you £5 a month gross, fail to withhold tax, and save a total of £15 over what it cost them last year. If they only paid you £5 a month instead of £6.25 they would still be legally obliged to withhold 20% for the tax man, leaving you with only £4 net. And that's not what they're doing.

Simply, it is Daily Mail misunderstanding tax law, perhaps on purpose, to make a sensational story about fat cat banks screwing over the man on the street. That is one of the ways Daily Mail make their money - writing attention-grabbing headlines.

If you send them the facts, albeit a year late, they will not retract the article because they don't care; it makes them money when people load it, and Halifax can't be bothered to sue them for it. However, most people don't - or shouldn't - rely on Daily Mail or This is Money for financial education.

diamonds

Westie983 wrote: »

Lots of leaflets and display boards in branches, I'm sure website will be updated by TYE. No changes to reward payment and interest is to be paid gross

Branch? Whats a tree to do with my electronic bank ?


As a 0% tax payer I'm ok with that, but as I posted elsewhere as Halifax gifts me money & no asset change hands so the £6.25 is a gift and liability is Capital Gains not income tax issue.


Been 10+ plus since I done my business and CGT applied to my circumstances but I'm thinking a cash gift is not income for tax purposes, it is not a interest payment.

diamonds

bowlhead99 wrote: »

No, the article is wrong.

Someone from the daily mail who doesn't understand the UK tax system has made an incorrect assumption.

The money Halifax pay you is not interest. You can have an average balance of £0.50 for the year as a whole and be sent £60. You can have an average balance of £1 for the year and still be sent £60. That is not an interest-based payment of 12000% p.a. relating to the money you lent them on a variable rate of interest which would magically decline to 6000% interest per year if your average balance increased to a pound. It is not interest at all. It is a fixed recurring income payment just like a royalty.

As a royalty-type payment, Halifax have to deduct 20% at source and any further tax is for the taxpayer to account directly to HMRC. As Halifax want to give you a fiver in your hand they agree to pay you 6.25 and withhold the tax.

If HMRC bring in a new savings allowance on interest income, this doesn't affect your liability to tax on the £60 a year, which is not interest income. Nor does it mean that Halifax are now trousering the £1.25.

Simply, it is Daily Mail misunderstanding tax law, perhaps on purpose, to make a sensational story about fat cat banks screwing over the man on the street. That is one of the ways Daily Mail make their money.

If you send them the facts, albeit a year late, they will not retract the article because they don't care. However , most people don't -or shouldn't - rely on Daily Mail or This is Money for financial education.

For me 0% tax until at least next Feb/March I'm wondering if the £6.25 should be paid in full, its not interest nor income its a gift.

Surely I am not liable for tax on a £6.25 monthly gift. Capital Gains ?

Consumerist

diamonds wrote: »

. . . but I'm thinking a cash gift is not income for tax purposes, it is not a interest payment.

So the question remains: why has Halifax been paying HMRC the tax on a "gift".

diamonds

Consumerist wrote: »

So the question remains: why has Halifax been paying HMRC the tax on a "gift".

To pay less corporation tax like the other big ones ? Reward Account, the gift that keeps giving ?


Their own stake is ripping HMRC off...only under the Tories!

bowlhead99

diamonds wrote: »

its not interest nor income its a gift.

Surely I am not liable for tax on a £6.25 monthly gift.

It's not a gift. It's a regular payment of income which they are paying you for doing them the favour of being their customer, feeding their account regularly with cash to show that you're not just sitting there with a dormant account, and generally being there for them to market their products to. Based on the contractual terms of the account, if you fulfil your obligations they give you a regular income.

There are tax laws on how such payments of regular income from a commercial organisation should be taxed - such as royalties, the analogy I gave above. Withholding is required at source. You can go back to previous threads on the subject for more clarity if you're genuinely interested; I know I and others have explained it before.

Capital Gains ?

What is capital gains about it? To qualify for the reward payment in line with the contractual terms of maintaining the account, you deposit money in a bank account in your own name and withdraw money from it to pay bills or other direct debits to organisations. In the course of doing that, where did you buy an item or ownership of an investment and sell it to Halifax for £6.25 more than you paid for it? And if it was a capital gain why would anyone withhold tax from you. There is no withholding tax on making capital gains.

So, that's nonsense.

diamonds

bowlhead99 wrote: »

It's not a gift. It's a regular payment of income which they are paying you for doing them the favour of being their customer, feeding their account regularly with cash to show that you're not just sitting there with a dormant account, and generally being there for them to market their products to. Based on the contractual terms of the account, if you fulfil your obligations they give you a regular income.

There are tax laws on how such payments of regular income from a commercial organisation should be taxed - such as royalties, the analogy I gave above. Withholding is required at source. You can go back to previous threads on the subject for more clarity if you're genuinely interested; I know I and others have explained it before.
What is capital gains about it? To qualify for the reward payment in line with the contractual terms of maintaining the account, you deposit money in a bank account in your own name and withdraw money from it to pay bills or other direct debits to organisations. In the course of doing that, where did you buy an item or ownership of an investment and sell it to Halifax for £6.25 more than you paid for it? And if it was a capital gain why would anyone withhold tax from you. There is no withholding tax on making capital gains.

So, that's nonsense.

Sleep deprivation/insomnia!


Sorry I'm thinking of the £125 joining incentive lol

Got confused between the two!


Jesus...

Right I'm off to bed apparently :rotfl:

Rich2808

One might suggest it's probably not material for HMRC to get too worked up over.

PeacefulWaters

diamonds wrote: »

http://www.thisismoney.co.uk/money/saving/article-3023407/Could-Halifax-Reward-customers-savings-tax-Budget-giveaway-snaffled.html


So LBG will ongoing be keeping the tax it used to pay HMRC... bar stewards.

You are making the rather dramatic mistake of believing a year old a Daily Mail article that epitomises lazy journalism.

Typical LBG, make nothing simple, a week before a new tax year and changes nothing on the Halifax website for under the personal allowance, 20% or 40% on interest or Reward payments

From the Halifax website:
http://www.halifax.co.uk/bankaccounts/current-accounts/reward-current-account/

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.