How can Nationwide's Fairer Payment be interest?

schiff

Interest surely requires a Capital Sum, a Rate of Interest and a Period of Time.
None of which apply.
Discuss.
(I've kept this separate as the discussion on the main thread is going the usual way)

gravel_2

It's not interest, it's taxable savings income.

eskbanker

It's not categorised as interest as such but "taxable savings income", albeit taxed in the same way as interest:

The payment is taxable savings income. This means that it is treated in the same way as any interest you may earn on your savings account or current account.

Some fixed-value payments made from reward current accounts, for example, are also treated like this, despite not being derived according to 'balance times rate' interest calculations as such.

35har1old

eskbanker said:

It's not categorised as interest as such but "taxable savings income", albeit taxed in the same way as interest:

The payment is taxable savings income. This means that it is treated in the same way as any interest you may earn on your savings account or current account.

Some fixed-value payments made from reward current accounts, for example, are also treated like this, despite not being derived according to 'balance times rate' interest calculations as such.

The Halifax reward account is paid out after tax is paid

Dazed_and_C0nfused

35har1old said:

eskbanker said:

It's not categorised as interest as such but "taxable savings income", albeit taxed in the same way as interest:

The payment is taxable savings income. This means that it is treated in the same way as any interest you may earn on your savings account or current account.

Some fixed-value payments made from reward current accounts, for example, are also treated like this, despite not being derived according to 'balance times rate' interest calculations as such.

The Halifax reward account is paid out after tax is paid

But that is an "annual payment" for tax purposes and taxed under different rules to interest i.e. the 0% rates aren't available for the Halifax reward payment.

WillPS

35har1old said:

eskbanker said:

It's not categorised as interest as such but "taxable savings income", albeit taxed in the same way as interest:

The payment is taxable savings income. This means that it is treated in the same way as any interest you may earn on your savings account or current account.

Some fixed-value payments made from reward current accounts, for example, are also treated like this, despite not being derived according to 'balance times rate' interest calculations as such.

The Halifax reward account is paid out after tax is paid

Only if you choose the (rubbish) '[£5] reward for keeping £5000 in your account' option. The sensible/good '[£5] reward for making £500 worth of debit card payments' option is cashback, and therefore not taxable. 

TheBanker

I suspect it's partly for practical reasons. The payment is taxable, Nationwide already have a way to report taxable savings income to HMRC, and HMRC have a mechanism to collect any tax due, usually by adjusting the individual's tax code.  

wiseonesomeofthetime

What I don't get is the term "taxable savings income" when you don't need savings with Nationwide to qualify for it 🤷‍♂️

Zanderman

wiseonesomeofthetime said:

What I don't get is the term "taxable savings income" when you don't need savings with Nationwide to qualify for it 🤷‍♂️

You do need savings, though merely a nominal amount.

(or a mortgage, though I'd guess the majority qualify on the savings side)

wiseonesomeofthetime

Zanderman said:

wiseonesomeofthetime said:

What I don't get is the term "taxable savings income" when you don't need savings with Nationwide to qualify for it 🤷‍♂️

You do need savings, though merely a nominal amount.

(or a mortgage, though I'd guess the majority qualify on the savings side)

Yeah, I read the criteria and you could quite feasibly qualify with a current account and mortgage, hence my post.

35har1old

Dazed_and_C0nfused said:

35har1old said:

eskbanker said:

It's not categorised as interest as such but "taxable savings income", albeit taxed in the same way as interest:

The payment is taxable savings income. This means that it is treated in the same way as any interest you may earn on your savings account or current account.

Some fixed-value payments made from reward current accounts, for example, are also treated like this, despite not being derived according to 'balance times rate' interest calculations as such.

The Halifax reward account is paid out after tax is paid

But that is an "annual payment" for tax purposes and taxed under different rules to interest i.e. the 0% rates aren't available for the Halifax reward payment.

I have heard of people claiming the tax paid back from HMRC