Have you declared tax on your bank rewards? Reply


Pretty Young Woman Withdrawing Money at the Bank Machine

In April 2016 the PSA (Personal Savings Allowance) came into force.

The PSA applies to all non-ISA cash savings and current accounts, and will allow some savers to receive a generous portion of their interest totally free of tax.

95% of savings will no longer be taxed.

Basic rate taxpayers will receive £1,000 in savings income tax free, higher rate taxpayers get a band of £500 and additional rate tax payers get nothing.

Sounds great but the key word is ‘Interest

Some banks have been giving ‘Rewards‘ instead of interest and these fall outside of the scope of the new PSA and as such will be taxable, for example..

http://www.co-operativebank.co.uk/assets/ns/bank/pdf/currentaccounts/everyday-rewards/benefits-document.pdf

http://www.barclays.co.uk/PersonalBanking/P1242689794073

https://www.halifax.co.uk/bankaccounts/current-accounts/reward-current-account/Default.asp

Currently Cash Back on spending doesn’t count as a reward so that is ok and not subject to tax.

I think this situation is confusing and could lead to taxpayers incorrectly failing to declare rewards thinking that they were interest!

 

steve@bicknells.net

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