My credit card company has just given me my first cashback... when I come to complete my self assessment tax return for 05/06 do I need to declare it? Is it income? If so which box does it go into - the interest box?
Thanks
Sue
Sue Stephens
Replies (5)
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Statement of Practice 4/97
Cashbacks and other incentives are covered in some detail in SP 4/97.
The SP includes this: "In general, ordinary retail customers purchasing goods, investments or services at arm's length will not be liable to income or capital gains tax in respect of any commission, discounts or cashbacks received by them. For example, an ordinary retail customer who, when purchasing a car, negotiates to receive part of the commission earned on the sale by the salesperson will not be liable to income or capital gains tax in respect of that commission."
So in general, credit card cashbacks shouldn't be taxable if they arise from use as a consumer. On the other hand, if the purchases on the card arise from purchases of business items as a sole trader, then the position may be differennt.
I would say it is income
as I can't see that it is a capital distribution or a refund of charges paid.
It would appear to me to be income from the credit card mash-up for using their card.
There may be some exemption somewhere for not declaring this, but I am not aware of it.