Bank Rewards effect on Benefits

datlex

I don't currently claim benefits. I just like to make sure that should I need to I can in full. I currently get various reward payments from having a number of accounts. I was wondering if these are counted as income in particular the ones that pay in money when claiming benefits. I know you can earn a small amount each week(I understand this to be £20), but wanted to know if these would count to that. My reason for asking is the company I am based at for is under constant review by its overseas owners who may decide to pull out in next couple of years depending on profitability. I like to be prepared. I am assuming that earnings in the form on vouchers for certain shops don't count.

[Deleted User]

My hunch is that income like this wouldn't count, someone may be along later to confirm.

Housing_Benefit_Officer

Wouldn't count as income. But if it accumulated in a bank account and went over £6,000 then it would be counted as capital.

Ed-1

Housing_Benefit_Officer wrote: »

Wouldn't count as income. But if it accumulated in a bank account and went over £6,000 then it would be counted as capital.

Are you sure? Halifax's Reward for example is classified as an annual payment and therefore is taxed as taxable income.

Other banks such as Barclays classify their reward payments as cashback and therefore is not taxable as income.

I can't see them ignoring taxable regular payments if classified as such for income tax purposes.

theartfullodger

It clearly is "income". Question is, would it be classified as income by HMRC and the various benefits agencies..
https://www.gov.uk/income-tax/overview

Safest bet, inform them all.. (you've nothing to hide eh?)

antrobus

Ed-1 wrote: »

Are you sure? Halifax's Reward for example is classified as an annual payment and therefore is taxed as taxable income.

Other banks such as Barclays classify their reward payments as cashback and therefore is not taxable as income...

Mmm. That's not what MSE says.

http://www.moneysavingexpert.com/news/banking/2016/07/halifax-barclays-or-co-op-bank-customer-you-may-need-to-pay-tax-on-your-rewards

That report says that both the Halifax Reward account's £5 a month and the Barclays Blue Rewards's £7 a month are subject to income tax. The only distinction made between the two back in 2016 was that, because the Halifax Reward was paid after the deduction of 20% tax, BR taxpayers had no extra liability.

Here's a report from everyone's favourite Daily Mail that says the same thing;
http://www.thisismoney.co.uk/money/saving/article-3595338/HMRC-robs-savers-tax-perk-monthly-bank-account-bonuses-claiming-count-annual-payments.html

Ed-1 wrote: »

..I can't see them ignoring taxable regular payments if classified as such for income tax purposes.

HMRC frequently ignore "taxable regular payments" if it's a PITA to get the data and the amounts involved come to doodly squat.

DWP may take a different view. I don't really know. The benefits system makes tax look simple.

Ed-1

antrobus wrote: »

Mmm. That's not what MSE says.

http://www.moneysavingexpert.com/news/banking/2016/07/halifax-barclays-or-co-op-bank-customer-you-may-need-to-pay-tax-on-your-rewards

That report says that both the Halifax Reward account's £5 a month and the Barclays Blue Rewards's £7 a month are subject to income tax. The only distinction made between the two back in 2016 was that, because the Halifax Reward was paid after the deduction of 20% tax, BR taxpayers had no extra liability.

Here's a report from everyone's favourite Daily Mail that says the same thing;
http://www.thisismoney.co.uk/money/saving/article-3595338/HMRC-robs-savers-tax-perk-monthly-bank-account-bonuses-claiming-count-annual-payments.html

HMRC frequently ignore "taxable regular payments" if it's a PITA to get the data and the amounts involved come to doodly squat.

DWP may take a different view. I don't really know. The benefits system makes tax look simple.

Barclays reclassified their reward payment late last year:

"...thanks to Barclays reclassifying the reward payments as 'cashback', from now on you'll no longer need to pay tax on what you earn. However, despite Halifax and Co-op operating similar reward accounts schemes, both told us there's been no change to the tax status of their reward payments..."

https://www.moneysavingexpert.com/news/banking/2016/11/barclays-blue-rewards-are-now-tax-free---act-now-to-get-a-free-55-in-a-year/amp

Given bank statements are needed to claim means-tested benefits which would clearly provide them with the data, and unearned income is normally counted in full, I'd be fairly sure that annual reward payments would be counted as income. How they would determine which payments are taxable income and which are simply cashback from the statements is another question. Interest, though taxable unearned income, is clearly not treated as income for benefits (just capital) but interest is given an exemption in the regulations. Annual payments could clearly be treated as an income stream for benefits purposes. They are paid regularly but only when certain conditions are met so whether they are counted could even depend on how often you meet the conditions.

datlex

Penitent wrote: »

Since you're working, you'd presumably be claiming contribution-based JSA for up to six months, so interest/rewards would be ignored during that period.

Once that runs out, you'd need to claim income-based JSA/Universal Credit. I can't remember if this counts as income for those, but it may be a moot point if you have a lot of savings. Income-based JSA is reduced if your savings are over £6k and stopped if over £16k.

I wish I had 6K in the bank. I move money around my accounts to earn rewards.

Housing_Benefit_Officer wrote: »

Wouldn't count as income. But if it accumulated in a bank account and went over £6,000 then it would be counted as capital.

I am guessing that interest eg the 3% on Tesco accounts doesn't count either?

Ed-1 wrote: »

Are you sure? Halifax's Reward for example is classified as an annual payment and therefore is taxed as taxable income.

Other banks such as Barclays classify their reward payments as cashback and therefore is not taxable as income.

I can't see them ignoring taxable regular payments if classified as such for income tax purposes.

I know the Halifax rewards are paid net of tax. Barclays are cashback. When there was the debate about whether should pay tax on Barclays, I declared it to HMRC and they treated it like interest tax.

Thanks for the answers folks. I am hoping I never have to find out for sure.

antrobus

Ed-1 wrote: »

Barclays reclassified their reward payment late last year:...

Did that work?

datlex wrote: »

... When there was the debate about whether should pay tax on Barclays, I declared it to HMRC and they treated it like interest tax.

xylophone

http://www.moneysavingexpert.com/news/banking/2016/11/barclays-blue-rewards-are-now-tax-free---act-now-to-get-a-free-55-in-a-year