Paying Tax on Barclays and Halifax Rearwards ?

sparkiemalarkie

Hi I have a Tax form to fill in and was looking for some help.
Do Barclays and Halifax Rewards count as savings interest or other income ? and are they paid before or after tax?
tia

sx

Dazed_and_C0nfused

They aren't interest but are taxable.  Halifax was paid after deduction of basic rate tax.

Do you think you are due a refund of some of the tax?

sparkiemalarkie

I think I am due a refund. I have a very low income and was taxed on some of my HL drawdown.
I asked HMRC to change my tax code but it got very confused. I posted about this a while ago and you were kind enough to reply.
https://forums.moneysavingexpert.com/discussion/comment/78064547#Comment_78064547

I thought it would sort itself out but I have been sent a form so trying to work through it .
thanks for your help
sx

zagfles

How are you getting eligibility to the Halifax rewards? Their bumf on the current rewards implies it's only taxable if you get it through maintaining a £5000 deposit, rather than spending £500 a month on the debit card, see the paragraph at the end of p3. https://www.halifax.co.uk/assets/pdf/bankaccounts/pdf/banking-offers-guide.pdf

But they don't state how it's taxable, eg interest or annual payment, presumably the latter otherwise they'd pay it gross as banks do with interest these days.

But their previous rewards worked differently. They should be spelling out exactly what the tax situation is, but as usual they don't.

SomeMadeUpName

Have a read here:

https://www.taxadvisermagazine.com/article/savings-income-issues-including-bank-accounts-paying-‘rewards’#:~:text=Banks must deduct tax at,the cash reward is taxable.&text=Banks do not have to,the gross amount is taxable.

zagfles

SomeMadeUpName said:

Have a read here:

https://www.taxadvisermagazine.com/article/savings-income-issues-including-bank-accounts-paying-‘rewards’#:~:text=Banks must deduct tax at,the cash reward is taxable.&text=Banks do not have to,the gross amount is taxable.

I think there's also a fourth type of reward - one that's not taxable at all. AIUI if the reward is related to spending then it's like cashback, like a credit card cashback, which I don't believe is taxable. So the current Halifax rewards are probably not taxable if you get them through spending £500 on the debit card, but are if you get them through a £5000 balance.

Natwest had a similar account, where you got cashback based on direct debits of certain amounts.

But I'm not sure on this. It's about time the regulator mandated banks spell out the tax status of their "reward" accounts.

Growingold

Just read this in the Halifax terms and conditions:-
For the £5 for £5,000 offer If you choose to keep £5,000 or more in your account, the Monthly Reward will be paid ‘net’ after the deduction of income tax at the rate set by law (currently 20%). The gross value of the Monthly Reward before income tax is taken off is £6.25. If you’re a higher rate tax payer, you may have to pay extra income tax on the Monthly Reward. If we have deducted more tax than you have to pay you may be able to claim it back from HMRC.
However it says nothing about the £5 reward for spending £500 on your debit card

xylophone

Re Barclays

https://www.barclays.co.uk/help/accounts/added-features/tax-blue-rewards/#:~:text=someone else's finances-,Will I have to pay tax on the,get from Barclays Blue Rewards?&text=All other current rewards and,subject to UK income tax.