NatWest and RBS to scrap bills cashback - what you need to know

sausage_time

sausage_time wrote: »

Wonder how that will work for joint accounts - will both need to log in to app? Bit of a bummer in any case, was doing rather well out of the current arrangement.

Just had my mail. It clarifies:

Only one joint account holder needs to log in to our mobile banking app to earn the Rewards. You won't earn more Rewards for multiple logins, or if all joint account holders log in during that month.

Wheres_My_Cashback

Novice_investor101 wrote: »

Must admit, this new version of the rewards account is better for me than the old one. I bank with NatWest anyway as I find the app excellent. I rarely login to the online banking site as I can do everything on the app.

As I live alone my bills are tiny. So it wasn't worth it before. Now, as I use the app at least every other day & all my DD's come out of my current account, I might as well sign up & get £3 a month for doing nothing different to what I've done for years.

Ditto, the new regime with NW for me will work out about 85p pm better as my usual rewards were about £4.15 pm due low bills.

What I will also do is move all my household bills to my San 123 Lite account which will earn me an additional £1.70 after the £1 fee.

So all in all £2.55 pm extra for just for moving a few DDs from NW to SAN.

If I didn't already have the S123 Lite I probably wouldn't move anything

zagfles

Consumerist wrote: »

Remember that only non-taxpayers will be able to earn £36 yearly. The Reward payments from NatWest/RBS are paid gross so are taxed as miscellaneous income at your marginal rate.

I'm not so sure these will be taxable. It would be nice if NatWest actually explicity stated the tax situation, but there's no mention of tax in the T&Cs.

But the new T&Cs seem to structure the reward payments to avoid them being taxable. The 2 DDs must be at least £2 each, or for the Premier/Black account £4.50, so the min DD amounts exactly match the reward. So you can't get more than 100% of the DDs in rewards.

Also the £1 reward for using the mobile app is described in the T&Cs as "a £1 refund in Rewards towards the monthly account fee you paid".

Currently the 2% reward on DDs is not taxable, AIUI it's classed as a "discount" even though it's obviously a subsidy from NatWest rather than a genuine discount on the bills. So if a 2% discount subsided by NatWest isn't taxable, then why would a 100% discount be? For most people of course it would far less than 100%, but no-one could have more than 100%.

And the £1 mobile app reward is a discount on the account fee, so can't believe that's taxable.

Consumerist

zagfles wrote: »

I'm not so sure these will be taxable. . .

Nor me.

Some interesting points you have raised but, frankly, I find the whole thing a bit confusing.

My comment was was based on an <article from Tax Adviser Magazine> the final paragraph of which said:

There are three main possible tax treatments, depending on the type of reward:

• If the reward takes the form of interest (that is a rate based on the account balance), it is savings income and eligible for the PSA. Banks should pay this to you gross without deducting 20% tax at source, but it is still taxable income.
• If the reward takes the form of a cash reward (not related to the account balance), for say depositing a certain amount per month, this is not savings income, but is probably an ‘annual payment’ (applicable even if reward is paid monthly). Banks must deduct tax at 20% before paying you the cash reward, and the gross amount of the cash reward is taxable. Since annual payments are not savings income, these types of reward are not eligible for the PSA (or the 0% starting rate for savings). If you are not liable to tax, you can reclaim any tax deducted by completing an R40 form or on your self-assessment tax return. If you are a higher-rate taxpayer you would need to pay the extra amount via a PAYE coding adjustment or through your tax return.
• If the reward takes the form of a cash reward (not related to the account balance) AND there is a fee for the account, the reward does not meet the conditions for an annual payment. It is still taxable however as ‘miscellaneous payment’. Banks do not have to deduct tax before paying you the cash reward, so you receive these rewards gross and the gross amount is taxable. These types of reward are not savings income, so they are not eligible for the PSA (or the 0% starting rate for savings). If you are a basic or higher-rate taxpayer you would need to pay any tax due to HMRC via a PAYE coding adjustment or through your tax return.’

The third bullet point seems to cover the situation which applies to the NatWest Reward account.

That said, I have reported the income to HMRC via my Personal Tax Account but I've heard nothing. So it is possible it may not be taxable in its present form - but from next year, who knows ?

MDMD

To me the NatWest one is identical to the Barclays scheme. The Barclays scheme is marketed as non taxable (they changed it in December 2016 to be classified as Cashback rather than miscellaneous income).

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

zagfles

Consumerist wrote: »

Nor me.

Some interesting points you have raised but, frankly, I find the whole thing a bit confusing.

My comment was was based on an <article from Tax Adviser Magazine> the final paragraph of which said:
The third bullet point seems to cover the situation which applies to the NatWest Reward account.

That said, I have reported the income to HMRC via my Personal Tax Account but I've heard nothing. So it is possible it may not be taxable in its present form - but from next year, who knows ?

That article also says

"Please note that we are talking about regular cash rewards here as opposed to cash incentives for people switching their accounts or cashback on certain types of spend, which are not taxable as they are considered a ‘discount’ rather than a reward."

So the NatWest reward account clearly now gives "cashback on certain type of spend", currently 2%, from Feb 100% of the first £4.

Consumerist

zagfles wrote: »

That article also says

"Please note that we are talking about regular cash rewards here as opposed to cash incentives for people switching their accounts or cashback on certain types of spend, which are not taxable as they are considered a ‘discount’ rather than a reward."

So the NatWest reward account clearly now gives "cashback on certain type of spend", currently 2%, from Feb 100% of the first £4.

I guess I missed that bit. On that basis it would seem that no tax is due. Thanks.

Eassenav

I am new to the forum but have been lurking for the last couple of months as I have been taking control of our finances after a few years of getting in a pickle with debt and spending.

My OH and I have a joint Reward Account with Natwest, we signed up in November 2019, having had a regular account for many years. It was more than a tad annoying for them to then announce the changes having spent time moving all our DDs from our Nationwide account to the Natwest.

I now have a Santander 123 Lite account and have moved most of the DDs to this, I left the Council Tax and Water bill with Natwest for now as these get a lower % amount cashback with Santander.

I am confused though by the new Ts&Cs with Natwest which state that 2 DDs of at least £2 are required to qualify for the £4 cashback, do these DDs have to be household bills or could they be for example a magazine subscription?

I have directly asked the bank and they say they need to be household bills but the literature does not confirm this and implies it could be any DD.

I also asked Santander about the tax issue and they haven't been able to give me a definitive answer.

Thank you for reading and any help you can give.

RG2015

Eassenav wrote: »

Do these DDs have to be household bills or could they be for example a magazine subscription?

I have directly asked the bank and they say they need to be household bills but the literature does not confirm this and implies it could be any DD.

Any DD will do.

I spoke to NatWest a couple of weeks back and the customer services person did not even know the Rewards account scheme was changing on 1st Feb.

I suspect that your NatWest person was still referring to the current scheme which only applies to household bills.

Anyway which household bill would be as low as £2 per month?

Eassenav

I suspect that your NatWest person was still referring to the current scheme which only applies to household bills.

Anyway which household bill would be as low as £2 per month?

That is what I thought too. When I asked (via online Chat) I did repeatedly point out that I was referring to after the changes come in and I quoted from the document she referred to and I specifically asked if it was household DDs or whether any DD (the example I gave was a magazine subscription as I thought there was less ambiguity with that) and she repeatedly said it had to be a household DD.

I am not convinced much training is given to advisors relating to the changes as I had another query regarding Nationwide's change in policy relating to their overdraft facilities and the advisor in branch just handed me the leaflet that I had read online and when I queried further she had to read it for herself! She even said she didn't know the answer to my query and she didn't know who would!

My plan is to have all the household DDs come out of our Santander account and then leave a couple of other DDs with Natwest as we also have the reward credit card that we use for all day to day expenses, shopping and fuel (although I have read that the cashback on that is halving but we will still be in profit).

I hadn't realised the Myrewards account was so complicated though and that me and the OH have 2 separate pots of rewards although our bank account is joint. I was set up as the primary holder of the rewards (i pay 20% tax) and OH is the main credit card holder (he is a higher tax payer) but when I wanted to buy a voucher with our rewards and realised that although together we have enough rewards they are in separate accounts so therefore I can't buy the voucher I wanted to until OH's reward account has a bit more in it. To switch him to the primary account holder for rewards and thus get all our rewards in one pot requires him to go in to the branch with photo id etc - not easy for him to do around work but if the DD income is taxed then perhaps we are better off leaving it as is.