Barclays Blue Rewards - tax status

EUnat

Has anyone else received this email? Looks like the £7 is actually not £7... and the Blue Rewards program is changing soon. Barclays managed to ef it up again..

"Guidance on the tax status of the Blue Rewards"

Thank you for banking with Barclays and for being a Blue Rewards customer. Blue Rewards enables you to benefit from a range of rewards based on the products that you hold with us, in addition to enhanced cashback.

When you joined Blue Rewards, we let you know that the Rewards may be subject to income tax. We want to provide you with more detail about the tax status of Blue Rewards and have included a 'Quick Reference Guide' below on how to declare this income for the 2015-16 tax year, if you need to. We'll contact you again before the end of the year, to let you know about changes we are making so that in the future the monthly Loyalty Reward will no longer be subject to income tax.

Which rewards are subject to tax?

This summary shows the taxable status for each reward:

Subject to Income Tax
Monthly Loyalty Reward £7
(the £3 monthly fee should not be deducted from the £7 for the purposes of tax calculations)

Not subject to Income Tax
Mortgage Reward
Insurance Reward
Loan Reward
Any SmartSpend or Expedia Cashback £5
Up to £3
£1



What do I need to do?

If you don't normally pay income tax or complete a Self-Assessment Tax return, or if you're unsure whether you need to, you can check by calling HMRC on 0300 200 3300. We're unable to advise you regarding your tax as it depends on your personal circumstances, such as your income.

If you normally complete a Self-Assessment Tax Return, you will need to declare your monthly Loyalty Rewards income, in addition to any other income you are required to declare. The Quick Reference Guide below provides an overview of how to do this. If you have already submitted your 2015/16 Self-Assessment, please contact HMRC as you may need to amend your tax return.

[...]

Blue Rewards is changing

We will contact you again before the end of the year to provide further details about changes we'll be making to Blue Rewards. These changes will ensure that in the future, the monthly Loyalty Reward will no longer be subject to income tax.

CuddlesTC

Yes, I got that this morning too.

Nice to have some firm confirmation of the current situation, even if it is going to change again!

RedDwarf82

Yes, I just got it.

I'm starting to wonder if silly news as http://www.moneysavingexpert.com/news/banking/2016/07/halifax-barclays-or-co-op-bank-customer-you-may-need-to-pay-tax-on-your-rewards actually make companies fix stuff.

burnoutbabe

nice of them to let us know 5 months after end of tax year, for those of us who file our tax returns promptly!

datlex

Yes I got the email. I have just been on to the chat link on the HMRC website about it. Really useful tool. I have informed the tax office now about my £7 per month earnings. They are treating it like interest so whilst technically taxable the first £1000 of interest is tax free. I have kept a copy of the chat needless to say. https://www.gov.uk/government/organisations/hm-revenue-customs/contact/self-assessment-online-services-helpdesk (link to chat on this link when they are open)

CuddlesTC

datlex wrote: »

Yes I got the email. I have just been on to the chat link on the HMRC website about it. Really useful tool. I have informed the tax office now about my £7 per month earnings. They are treating it like interest so whilst technically taxable the first £1000 of interest is tax free. I have kept a copy of the chat needless to say. https://www.gov.uk/government/organisations/hm-revenue-customs/contact/self-assessment-online-services-helpdesk (link to chat on this link when they are open)

I just called, and the helpful lady I spoke to also said it would be treated as interest.

burnoutbabe

are barclays not at fault for paying out this money without deducting 20% all last year. Which means that everyone with this account, bar non tax payers, has not paid the correct amount of tax and should do a tax return?

bigadaj

Halifax reward goes down as other income, with the basic rate tax paid. This is a separate box to interest, and would seem the more applicable classification for the Barclays payment as well.

datlex

bigadaj wrote: »

Halifax reward goes down as other income, with the basic rate tax paid. This is a separate box to interest, and would seem the more applicable classification for the Barclays payment as well.

Maybe so but the tax office have been advised by a number of us and told us that they are counting it as interest.

polymaff

If only HMRC staff read and followed their own flipping Manuals, they would find:

“Interest is the return or compensation for the use or retention by one person of a sum of money belonging to or owed to another. Interest accrues from day to day even if payable only at intervals, and is, therefore, apportionable in respect of time between persons entitled in succession to the principal.”

and, just to hammer it home:

" ... there can be no such thing as interest without the requisite principal"

So, IMHO, HMRC staff are completely wrong if they advise you to declare Blue Reward payments as interest.

https://www.gov.uk/hmrc-internal-manuals/savings-and-investment-manual/saim2030

bigadaj

datlex wrote: »

Maybe so but the tax office have been advised by a number of us and told us that they are counting it as interest.

Trust you as taking full details of these conversations including time, date and name, as with many financial institutions their call centre staff sent often aren't very well trained, so when it comes to reviewing your tax return the fact you have been told something over the phone may not carry much weight.