Banks are increasingly offering a "Loyalty Reward" (or similar words) to be credited to business accounts (probably as a sop for their increased charges). Is this to be treated as bank interest received or as a credit against the bank charges in the accounts? In the case of companies, there is obviously no tax deducted at source, so there is no real difference in the tax payable. But in the case of self-employed customers, if the "reward" is treated as net of tax (and entered on the SA Return), there is a difference to treating the receipt as a (gross) credit against bank charges.
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I know that the Halifax reward payments used to be classified as interest and were paid net of basic rate tax.
Not sure about other banks.
Barclays Loyalty Rewards
As i understand it a Barclays Loyalty Reward is Barclays Bank repaying a percentage of the Customers Bank Charges back to them based on how many years they have been a bank customer and is not taxed interest.
Barclays Loyalty Rewards
If it is effectively a discount, I don't understand why Barclays don't state the Reward figure as a reduction on the bank charge notification and then charge the net amount.
For a small business the current system is just over complicated, offering no paperwork for the reward other than a mention on the statement
This just irritates me when it comes to doing a bank reconciliation - it doesn't make me feel positive towards Barclays.
It smells like a marketing committee's whizzo idea. Maybe they got in Perfect Curve from W1A. Insufficient work was given to the endless trivial work it creates for thousands of customers when doing their accounts.