Halifax reward payments

kimwp

My understanding from a tax website is that the Halifax £5 reward payments come under "miscellaneous payments" because they are not proportional to the amount of money in the account (which would be interest) and are paid on an account that has a fee. As miscellaneous payments, they come under the £1000 a year trading allowance. Does this seem right and if so, in theory should they be paid tax free by Halifax as anyone earning over the trading allowance should be filling in a tax return to pay the tax on it anyway?
I'll try to find the link to post it.

ZeroSum

If you get the £5 from having £5k balance, you actually get £6.25 net of tax

If you get the £5 from the £500 debit card transactions, its cashback & therefore tax free

kimwp

ZeroSum said:

If you get the £5 from having £5k balance, you actually get £6.25 net of tax

If you get the £5 from the £500 debit card transactions, its cashback & therefore tax free

Ooh, good to know! So with the £5k balance, they'll put £6.25 into your account each month? 

Ed-1

kimwp said:

ZeroSum said:

If you get the £5 from having £5k balance, you actually get £6.25 net of tax

If you get the £5 from the £500 debit card transactions, its cashback & therefore tax free

Ooh, good to know! So with the £5k balance, they'll put £6.25 into your account each month? 

No you have to claim back the tax from HMRC (form R40).

kimwp

Thank you!

kimwp

It took me ages to find the links, so for anyone interested:

Why Halifax £5 reward payments are "miscellaneous payments": https://www.litrg.org.uk/tax-guides/savers-property-owners-and-other-tax-issues/savings-and-tax 

What the trading allowance is: https://www.litrg.org.uk/tax-guides/self-employment/what-trading-allowance 

Halifax T&C's for the Extra Rewards - relevant info at the bottom of page 3 showing that the £5 for keeping a £5k balance is paid after tax: https://www.halifax.co.uk/assets/pdf/bankaccounts/pdf/banking-offers-guide.pdf

colsten

kimwp said:

Halifax T&C's for the Extra Rewards - relevant info at the bottom of page 3 showing that the £5 is paid after tax: https://www.halifax.co.uk/assets/pdf/bankaccounts/pdf/banking-offers-guide.pdf

The tax deduction for the £5 only applies If you choose to keep £5,000 or more in your account.

Whether you consider the £5 for spending £500 with your debit card as cashback or as 'miscellaneous payment', the bottom line will be the same for the majority of people: i.e. it is not taxable.

kimwp

colsten said:

kimwp said:

Halifax T&C's for the Extra Rewards - relevant info at the bottom of page 3 showing that the £5 is paid after tax: https://www.halifax.co.uk/assets/pdf/bankaccounts/pdf/banking-offers-guide.pdf

The tax deduction for the £5 only applies If you choose to keep £5,000 or more in your account.

Yes, I thought that was clear from the thread and the content in the link, I will edit my post to make it clearer.

anxiousnow

What day of the month is the £5 reward paid in please?

Ed-1

anxiousnow said:

What day of the month is the £5 reward paid in please?

12th or next working day

busy_dad

kimwp said:

It took me ages to find the links, so for anyone interested:

Why Halifax £5 reward payments are "miscellaneous payments": https://www.litrg.org.uk/tax-guides/savers-property-owners-and-other-tax-issues/savings-and-tax 

What the trading allowance is: https://www.litrg.org.uk/tax-guides/self-employment/what-trading-allowance 

Halifax T&C's for the Extra Rewards - relevant info at the bottom of page 3 showing that the £5 for keeping a £5k balance is paid after tax: https://www.halifax.co.uk/assets/pdf/bankaccounts/pdf/banking-offers-guide.pdf

Morning, I’m having some trouble getting my head around the tax treatment for bank reward payments despite the above advice.

For the Halifax £5 reward the general advice I’ve found (and from the first link above) is that it should be declared on a tax return. Halifax T&Cs indicate that if £5k is kept in the account the reward is paid net of 20% income tax, however this isn’t mentioned if the reward is for spending £500 on debit card so I assume tax isn’t deducted. 

For the latter I am therefore wondering if this needs to go on a return as gross additional income, net or not at all. A poster earlier in this thread indicated it would be treated as cash back and therefore tax free, but I can’t find any other reference to this.

Any help appreciated.