Current account switching bribes - tax?

cashcoward

How are switching bribes regarded by HMRC? Are they liable to Income Tax and, if so, are they "Interest" or simply "Other Income"?

PaulW922

No they are not usually interest and are free of income tax - they are more 'gifts'. Returns for paying in money are different, such as the Halifax Reward account that pays £5 a month. However all taxpayers now get an allowance of £1000 a year of interest tax free anyway (£500 for high rate taxpayers).

xylophone

The switching incentive is tax free but the Halifax monthly reward is taxable (and tax has been paid at basic rate - if you are entitled to the income tax free you can reclaim - if you pay tax at higher rate you should advise HMRC). The same applies to the Co-op.

The reward payment on Barclays accounts is taxable but has not been taxed - you should advise HMRC.

cashcoward

Thanks, Paul and Xylophone for your information. Much appreciated.

agrinnall

If you think of the payment as a bribe should you really be considering doing it? Are you the sort of person who is prepared to be bribed? You might want to reconsider the terminology you use if you aren't.

[Deleted User]

Bribe(v)=dishonestly persuade (someone) to act in one's favour by a gift of money or other inducement.

Incentivise(v)=motivate or encourage (someone) to do something; provide with an incentive.

Incentive would seem a better word to use.

bigadaj

Bribe or incentive. I'm not too bothered, Semantics in terminology.

One persons freedom fighter is another's terrorist.