Halifax and Bank of Scotland taking tax from interest

ajo

I am just in the process of reviewing all my accounts with rewards etc. (this may take some time as I have been meaning to do it for a while) anyway. I have noticed on my statements that Halifax have taken tax from the gross, reducing the net.

The previous payment this didn't happen and this is all still under £1000 interest.

Is this correct, has anything changed?

Thanks

Ed-1

ajo wrote: »

I am just in the process of reviewing all my accounts with rewards etc. (this may take some time as I have been meaning to do it for a while) anyway. I have noticed on my statements that Halifax have taken tax from the gross, reducing the net.

The previous payment this didn't happen and this is all still under £1000 interest.

Is this correct, has anything changed?

Thanks

They won't be taking tax from interest.

They'll be taking tax from reward payments as these are 'other income' (not interest).

ajo

Ed-1 wrote: »

They won't be taking tax from interest.

They'll be taking tax from reward payments as these are 'other income' (not interest).

So the percentage quoted is not "interest" but a "reward"?

The previous year nothing was taken.

eskbanker

ajo wrote: »

So the percentage quoted is not "interest" but a "reward"?

You tell us - what is the actual description of the payment you're referring to and how much is it?

Edit: Bank of Scotland reduced its Vantage interest rate from 2% to 1.5% from 1 July, would that explain a lower interest payment?

Zanderman

ajo wrote: »

I am just in the process of reviewing all my accounts with rewards etc. (this may take some time as I have been meaning to do it for a while) anyway. I have noticed on my statements that Halifax have taken tax from the gross, reducing the net.

The previous payment this didn't happen and this is all still under £1000 interest.

Is this correct, has anything changed?

Thanks

You mention accounts with 'rewards' - rewards are not interest.

pochisoldi

Halifax Rewards are not interest they are classified as "Annual Payments" under the tax rules, which means they get treated the way interest used to be: basic rate tax deducted at source, paid over to HMRC, and a tax certificate issued to the recipient after the end of the tax year.

This is due to the (idiotic)* way that Halifax have structured their reward scheme.

More info on the tax side at:
https://www.gov.uk/hmrc-internal-manuals/savings-and-investment-manual/saim8010

PochiSoldi

* Idiotic, because Barclays fixed this issue nearly a year ago by simply rewording their reward scheme T&Cs. All Halifax have to do is to copy the Barclays structure, and simply drop the obligation to stay in credit in order to get the reward.

eskbanker

pochisoldi wrote: »

Idiotic, because Barclays fixed this issue nearly a year ago by simply rewording their reward scheme T&Cs. All Halifax have to do is to copy the Barclays structure, and simply drop the obligation to stay in credit in order to get the reward.

That presupposes that Halifax see this as an 'issue' that needs to be 'fixed'....

badmemory

It won't matter in a couple of years anyway because they will have reduced it out of existence.