Bank switching incentive payments and monthly rewards, do they count towards the PSA ?

A_Aardvarkie

In the last financial year I switched to a Nationwide account and received a bonus, I can't tell if this bonus needs to be included for the PSA. Similarly I have a Natwest account that pays £3 reward each month (actually the reward is £5 but they charge £2 for the account), again I can't tell if this needs to be included for the PSA. Has anyone been able to clarify this ? Is the PSA based on savings interest only or does it include switching bonuses and monthly rewards ?                                  

Dazed_and_C0nfused

A_Aardvarkie said:

In the last financial year I switched to a Nationwide account and received a bonus, I can't tell if this bonus needs to be included for the PSA. Similarly I have a Natwest account that pays £3 reward each month (actually the reward is £5 but they charge £2 for the account), again I can't tell if this needs to be included for the PSA. Has anyone been able to clarify this ? Is the PSA based on savings interest only or does it include switching bonuses and monthly rewards ?                                  

I suspect you've misunderstood a few things about the savings nil rate of tax (aka Personal Savings Allowance).

You don't ever declare things for it.  If necessary you declare your taxable income, including any taxable interest.  HMRC (or your tax return software) then calculate the tax due based on your total taxable income.

A switching bonus isn't interest.  The NatWest rewards scheme isn't interest.

A_Aardvarkie

Dazed_and_C0nfused said:

A thanks_Aardvarkie said:

In the last financial year I switched to a Nationwide account and received a bonus, I can't tell if this bonus needs to be included for the PSA. Similarly I have a Natwest account that pays £3 reward each month (actually the reward is £5 but they charge £2 for the account), again I can't tell if this needs to be included for the PSA. Has anyone been able to clarify this ? Is the PSA based on savings interest only or does it include switching bonuses and monthly rewards ?                                  

I suspect you've misunderstood a few things about the savings nil rate of tax (aka Personal Savings Allowance).

You don't ever declare things for it.  If necessary you declare your taxable income, including any taxable interest.  HMRC (or your tax return software) then calculate the tax due based on your total taxable income.

A switching bonus isn't interest.  The NatWest rewards scheme isn't interest.

Thanks, yes I know you don't declare things for it and that you declare your taxable income. I wanted to know if either the bonus or the reward bonus are taxable incomes. I know they are not classed as interest

phillw

https://community.hmrc.gov.uk/customerforums/sa/232aafbc-a756-ec11-a3ee-00155d9742fa

https://www.taxadvisermagazine.com/article/savings-income-issues-including-bank-accounts-paying-‘rewards

I'd love to know the answer as I'm kinda seeing conflicting information there.

Eco_Miser

That second link produced a 404 - the correct link is

https://www.taxadvisermagazine.com/article/savings-income-issues-including-bank-accounts-paying-‘rewards’  with open and closing single quote marks round rewards.

In my experience (which may be wrong), switching bonuses and cashbacks (such as Halifax's reward for spending £500 by debit card) are not taxable, but other rewards (such as Halifax's reward for keeping £5000 in the account) are, and have BR tax deducted.

youngretired

Switching incentives are not taxable and Rewards are already taxed before being paid to you, so you do not have to declare them.

If you are a non tax payer then you can claim the tax back for the Rewards.

eskbanker

youngretired said:

Switching incentives are not taxable and Rewards are already taxed before being paid to you, so you do not have to declare them.

If it's taxable income then it has to be declared by anyone already self-assessing, or any higher rate taxpayers, who are liable to pay the rest of the 40%.