EXPIRED: Gatehouse Bank/Raisin UK offering 2% AER on 12 month fixed term accounts plus £50 bonus

stphnstevey

masonic wrote: »

It's considered interest by HMRC.

Your are probably right, but can you explain the rationale please?

masonic

stphnstevey wrote: »

Your are probably right, but can you explain the rationale please?

The rationale. as you put it, is that HMRC complies with the UK legislation around profit-share arrangements, in particular Section 51 of the Finance Act 2005.

stphnstevey

masonic wrote: »

The rationale. as you put it, is that HMRC complies with the UK legislation around profit-share arrangements, in particular Section 51 of the Finance Act 2005.

How is this a profit share, rather than an inducement to purchase?

https://www.gov.uk/government/publications/statement-of-practice-4-1997/statement-of-practice-4-1997

In general, ordinary retail customers purchasing goods, investments or services at arm’s length will not be liable to Income or Capital Gains Tax in respect of any commission, discounts or cashbacks received by them

eskbanker

stphnstevey wrote: »

How is this a profit share, rather than an inducement to purchase?

https://www.gov.uk/government/publications/statement-of-practice-4-1997/statement-of-practice-4-1997

In general, ordinary retail customers purchasing goods, investments or services at arm’s length will not be liable to Income or Capital Gains Tax in respect of any commission, discounts or cashbacks received by them

Conversely, what makes you apparently contend that it falls within "commission, discounts or cashbacks"? It's obviously neither of the first two and is no more a cashback than standard bank interest would be.

Gatehouse clearly declare it as a profit share at https://gatehousebank.com/personal/savings/savings-faqs:

Why do your savings accounts pay profit not interest?
Payment and receipt of interest isn’t permitted under Shariah principles - it’s thought that money shouldn’t be generated from money. It’s also thought that money shouldn’t be left idle, but put to good use through trade that’s consistent with Shariah principles. So, we put your savings to work to earn a profit. To date, we have always generated and paid our customers the expected profit rate.

What does expected profit mean?
The expected profit rate is the rate of profit we expect to deliver to you from the returns generated by investing the funds you deposit with us. The profit we share with you is the expected profit rate we offer at the time you open your account. We monitor your account on a daily basis to make sure the expected profit rate will be achieved. To date, we have always generated and paid our customers the expected profit rate.

stphnstevey

Sorry, thought we were talking about the bonus from Raisin, not the underlying account

veryintrigued

Anyone else attempt to sign up for another follow on product but then days later advised that this reinvestment had failed due to 'Technical difficulties'? In the same email they then offered £5 compensation.

It may be only a fiver but they just keep throwing money away!

masonic

stphnstevey wrote: »

Sorry, thought we were talking about the bonus from Raisin, not the underlying account

It would appear the bonus is being treated as cashback and therefore is not taxable. I suppose that strictly at maturity this might be considered to lead to a capital gain on the principal, but this would only be a consideration for those who make substantial gains in the same tax year elsewhere.

Sea_Shell

Anyone going to roll over to another product?

We'll probably go for the 9 month option, as it'd only be earning 1.5% if we cashed it in, and we won't need it in the meantime.

Steve_xx

Sea_Shell wrote: »

Anyone going to roll over to another product?

We'll probably go for the 9 month option, as it'd only be earning 1.5% if we cashed it in, and we won't need it in the meantime.

There are a few easy access accounts currently, that pay 1.5%, therefore there's little point in locking for 9 months. Unless of course you feel that rates may drop over the coming 9 months!

Deneb

veryintrigued wrote: »

Anyone else attempt to sign up for another follow on product but then days later advised that this reinvestment had failed due to 'Technical difficulties'? In the same email they then offered £5 compensation.

It may be only a fiver but they just keep throwing money away!

Yes, both Mrs D and myself. As a result of those emails though, I can't be @rs3d with the platform any longer, so all funds withdrawn and sent elsewhere. Just waiting for the two fivers and they'll be withdrawn too!