Are Cashback Rewards Taxable?
For the vast majority of UK shoppers, no—HMRC treats personal cashback as a price discount rather than income, so there’s nothing to declare. Tax considerations kick in only when cashback is earned on business or employer-funded spend (we cover those edge cases below).
“Free money” always raises eyebrows at tax time. With UK consumers expected to funnel over £18 billion through cashback programmes, it’s worth knowing when those extra quid in your wallet might trigger HMRC—and when they’re simply classed as a discount. Below we break down HMRC guidance, key business exceptions, and explain how Curve Pay cashback fits squarely in the non-taxable camp for everyday shoppers.
1. What Counts as “Cashback Rewards”?
|
Reward Type |
Example |
Payout Form |
|
Credit/Debit Card Cashback |
1 % monthly rebate on your Curve Pay spend |
Statement credit or Curve Cash balance |
|
Bank Account Rewards |
£5 Barclays Blue Rewards |
Cash deposit (often taxed at source) |
|
Retail Cashback Sites & Apps |
5 % back via TopCashback |
Bank transfer or PayPal |
|
Welcome Bonuses |
£20 for opening a new card with no spend requirement |
One‑off cash credit |
2. HMRC’s General Rule: Personal Cashback = Discount, Not Income
HMRC’s Statement of Practice 4/97 and Business Income Manual confirm that cashbacks received by private individuals on their own spending are not taxable. HMRC views the reward as reducing the purchase price, similar to a shop coupon. (gov.uk)
Example: You buy trainers for £100 and receive £5 cashback. HMRC treats it as if the shoes cost £95—no income to declare.
3. Key Exceptions & Edge Cases
|
Scenario |
Tax Position |
Source |
|
Self‑Employed / Limited Co. uses business card and keeps cashback personally |
Treated as trading receipt; must declare as income |
BIM100210 (gov.uk) |
|
Employer → Employee card rewards on reimbursed expenses |
May become a benefit in kind if rewards aren’t passed to employer |
EIM21618 (gov.uk) |
|
Bank account “rewards” taxed at source (Halifax, Santander pre‑2023) |
Banks deduct 20 % BASIC‑RATE tax automatically; counts as savings income |
MoneySavingExpert forum & bank T&Cs (forums.moneysavingexpert.com) |
|
Signup bonus with no spend requirement |
HMRC could deem it income (similar to the U.S. $600 rule) though no public UK test case yet |
Tax specialists’ commentary |
|
Business VAT on goods with cashback |
Reduce input VAT claim by net-of-cashback price |
HMRC VAT notice 700/7 |
5. Record‑Keeping Best Practices
-
Save statements—HMRC has four‑year look‑back powers.
-
Separate personal vs business cards—simplifies SA103 boxes.
-
Note taxed‑at‑source rewards—interest section of Self‑Assessment.
-
Log sign‑up bonuses—flag any > £500 one‑off cash gifts for accountant review.
6. How Are Curve Pay Rewards Treated?
|
Feature |
Tax Status |
Why |
|
Curve Rewards (up to 20 % back) |
Not taxable for personal spend |
HMRC views as discount on price you paid |
|
1 % Cashback on up to 12 selected merchants |
Not taxable |
Applies on Curve Pay Pro & Pro+ plans; treated as discount |
|
Not taxable |
Same principle—price reduction |
|
|
Business Spend via Curve |
Declare cashback in company accounts |
Falls under BIM100210 rules |
Because Curve Pay pays rewards only after you spend, they function as a purchase rebate—not interest or salary. Good news: no extra boxes on your tax return for your morning flat white.
7. FAQs
Q1: Do I include cashback in my Personal Savings Allowance?
No. Unless the bank labels it “interest” and deducts tax (rare post‑2023), cashback sits outside savings income.
Q2: I’m a sole trader—do I split personal vs business rewards?
Yes. Pro‑rate the cashback based on which expenses were business vs personal.
Q3: Does Curve Pay issue a tax statement?
Not needed for personal users; the app logs cashback amounts for reference. Business account holders can export CSVs.
TL;DR – Tax & Cashback
-
Personal shoppers: Not taxable—HMRC treats cashback as a discount.
-
Business or reimbursed spend: Declare it.
-
Sign‑up cash with no spend: Could be taxable; keep records.
-
Curve Pay Rewards: Up to 1 % cashback at up to 12 chosen merchants, brand offers up to 20 %, and 1 % cashback on international spend—HMRC treats all as purchase rebates, so no tax for typical consumers.
The information provided is for general informational purposes only and should not be construed as legal, tax, or financial advice. Curve is not licensed tax professionals, and we do not provide tax advice. For guidance on your specific tax situation, please consult with a qualified tax advisor or accountant.
Read more about Curve Pay plans.
