Does a credit card "cash-back" count as income tax purposes?

No (unless you were buying business items on it I suppose?).

I have always thought of my cash back as "deferred discount".

Co-operative dividends are never taxable. Neither are rebates, although they may be subject to VAT (or more exactly, not eligible for VAT refund). There was an issue (mostly in the USA) over income tax on frequent flyer miles where the ticket was paid for by the employer. That was resolved by Congress. I haven't seen the issue here or in other countries.

There's an interesting point, though, on at least some credit card rebates. Because financial transactions are VAT-free, many store cards and other credit transactions bear a notional "fee" of 2-1/2% or so, borne by the store, that does not bear VAT; the store keeps the money since you are paying VAT on the whole sales price. I don't see that has any implications for income tax though.

Doesn't answer your question but "Air Miles" are a taxable benefit according to this University of Sunderland website. Interesting to read how these big organisation agree favourable rates for areas such as "Subsistence" with the Revenue. The Air Miles section is halway down:

"Please note that it is an offence to select a more expensive flight option for personal gain, e.g. to obtain air miles. Air miles obtained while travelling on University business are a taxable benefit and should be declared to the Inland Revenue on the employee's tax return. Also, such air miles should be used to offset the cost of future University business trips."

...at which point you'd claim it back.

Should I declare the loyalty coupons we get from Tesco? If not, what's the difference?

Matti

The crucial bit is his quote is "Air miles obtained *while travelling on University business* are a taxable benefit".

If you pay for business travel etc (which you then claim back on expenses) with your credit card and get cashback/perks then these are taxable benefits. Your employer's spending has earnt you them.

Air miles/cashback you get from personal spending are not taxable, AIUI. Although ISTR something in the tax return guide about cashback spread over a number of years possibly being taxable, but I guess this is because they assume an interest element.

I suggest that the principle is that any benefit we obtain from spending our own money is not subject to tax, whilst any benefit we obtain from spending someone else's money should be treated as taxable.

Matti

I recently got a free case of wine for switching our company to cheaper electric

- do i have to put the wine on my tax return?

Just take a couple of bottles down to the good folk at your local tax office.

Matti

Bribes are the property of the employer. If the employer gave the wine to you, it is taxable.

No. It is just a discount on what you spent.

So who becomes responsible for declaring and paying the tax, and setting a

The employer, on form P11d. The employer pays the NI, and you would normally get an amended tax code.

Do they give a guide as to how to calculate that? e.g one air mile is worth x p of income? And what about the fact they expire with some carriers, e.g you might get (say) 300 air miles which you cant do anything with, and then they might expire before you get enough to use them? And the benefit is very variable, a flight taken at some times of year might be worth more than at another. At what point are they taxable I wonder, upon 'earning' them, or redemption?

When BR decided that it needed a frequent traveller scheme to compete with airlines the revenue decided that it sometimes created a taxable benefit. They calculated by how much and gave the bill to BR as it was easier than chasing all the individuals that received the points. This ultimately led to the desmise of the scheme (which was crap anyway)

tim

Thanks for your answer, and to other posters who also responded.

Andreas.

In message , Andreas Pagel wrote

Have you noticed that they are now offering double cashback (2% on the first £2000 and 1% thereafter) for new customers but presumably not for existing customers?

That doubling of the standard cashback is available only on purchases made until May 2005, so it's just a short-term introductory offer.

Matti

Now I hadn't seen that. I applied for an Accucard which was offering 0.8% as that would beat the 0.5% offered by Morgan Stanley after the first £2000 of spending, but a few weeks after I got it they reduced their offer to

I've now got a Sainsbury's card with a 0% interest charge offer till the end of the year. Seems a lot better - I can just earn interest on the balance instead of paying it off.

Andreas.