Referral payment

winterbells1992

Hi! I’ve had a really
good google and I’m struggling a bit. Is a referral payment of 200 pounds for a referral for a ‘refer a friend’ scheme for cosmetic dentistry classed as income for hmrc and income for universal credits? 

Many thanks 

Spoonie_Turtle

Don't know about HMRC but for UC it will almost certainly be capital - a one-off, not for services or goods provided, and without reference to a time period.

winterbells1992

Ok so I currently have no savings- I received a small top up from UC ( I work full time but am now on my own with my daughter and due to living in a high rent area I get the top up) 
if it’s classed as capital do I just declare the 200 pounds? I’m worried they will think it’s income but it’s just a reward payment for referring a friend? 

poppy12345

If your capital is less than £6,000 you do not need to declare it.

winterbells1992

Ok thanks so much for your help. So a payment like this is always classed as capital and not as income? Sorry I’m new to this all, so couldn’t find any guidance about what is classified as what! 

Woodstok2000

For HMRC, if you got the bonus for referring a friend,  I think it counts as 'miscellaneous income'. First £1000 is tax free, after that you need to declare it.

Strangely, if your friend got a signing up bonus because you referred them, that's not taxable at all.

Yamor

You will likely get away with it, and the DWP themselves may even tell you it isn't income, but purely from a legal perspective, it is income.

It will either count as unearned income under Reg. 66(1)(m), or, if you can argue that it represents payment for having done something, then it would count as earned income under Reg. 52(a)(3).
Clearly. It would be better for you for it to be earned income.

For income tax, as has been mentioned above, it will be covered by the trading allowance.

winterbells1992

thanks for the additional Information-
so for miscellaneous income, is this 1000 separate to my own income that I already earn and pay tax on via PAYE? 

winterbells1992

If I get the 200 pounds I won’t be saving it either, I will pay it straight off on a loan, so I’m really hoping I can do everything the correct way, however I have told them to hold off on transferring to me whilst I check my situation on tax or UC 

Yamor

winterbells1992 said:

thanks for the additional Information-
so for miscellaneous income, is this 1000 separate to my own income that I already earn and pay tax on via PAYE? 

Yes, it is an exemption purely for miscellaneous or trading income, regardless of what you earn from employment.

winterbells1992

Thank you again, you have been really helpful, appreciate it