Natwest Reward - paid gross or net of tax

locky123

Previously reclaimed tax on Halifax and Co-op monthly rewards using R40 form, but cant find any info on Natwest Reward? Is it paid gross or net?

PRAISETHESUN

Fairly sure NatWest/RBS rewards are considered "cashback", which means it is there is no additional tax to pay/reclaim

Silvabod

Have just opened a NatWest account, and my actions qualify for their total £5 a month (£60 p.a.) "Rewards".
My total interest income exceeds £1000 p.a. and this will be my first year of tax assessment. Do I include it as income ?
"Rewards" are not interest, they're unrelated to a capital - Natwest "interest" is paid separately.
 "Rewards" are put into a separate account, customers only paid for specific actions each month.
I cant find anything specific, although it seems Halifax offer similar incentive which is taxfree.
Is there a source of (tax-qualified) advice, please ?

masonic

Silvabod said:

Have just opened a NatWest account, and my actions qualify for their total £5 a month (£60 p.a.) "Rewards".
My total interest income exceeds £1000 p.a. and this will be my first year of tax assessment. Do I include it as income ?
"Rewards" are not interest, they're unrelated to a capital - Natwest "interest" is paid separately.
 "Rewards" are put into a separate account, customers only paid for specific actions each month.
I cant find anything specific, although it seems Halifax offer similar incentive which is taxfree.
Is there a source of (tax-qualified) advice, please ?

Some rewards can be considered annual payments. They would fit all of the following criteria:

- They are made under legal obligation (i.e. a binding contract),

- They must be recurring or capable of recurring over a period of at least one year,

- They must consist of income for the recipient, not a return of their capital (such as cashback), AND

- They must be 'pure income profit' (in other words they must not require the recipient to do any work in return for the payment)

See https://www.gov.uk/hmrc-internal-manuals/savings-and-investment-manual/saim8020

The example of Halifax Reward Extras is an interesting one, because one type of reward (for spending on a debit card) is cashback, not an annual payment, but the other type (for keeping cash in the account) is treated as an annual payment. Providers must deduct tax at source from annual payments.

The case of Natwest also has nuance: the reward for paying out direct debits (set at a minimum value of £2 for good reason) and debit card spending can be considered cashback as they are just returning money you spend, whereas the £1 reward for logging in might ordinarily be considered an annual payment, but it is treated as a discount on the monthly account fee. So no part of the reward represents income.

orange-juice

If you opt to donate your co-op rewards to charity, is it still counted against you, somehow? Or does it go straight to them directly so you are never 'associated' with it?

masonic

orange-juice said:

If you opt to donate your co-op rewards to charity, is it still counted against you, somehow? Or does it go straight to them directly so you are never 'associated' with it?

If they donate it to charity on your instruction, then you are not treated as receiving it.