Drawing a parallel with non-business situations definitely isn't useful. Log in to online or mobile banking at least once by 30 December 2020. The move was announced today by Banking Competition Remedies Limited as it became clear the state-owned Royal Bank was struggling to shift the targeted 120,000 clients from its books by 25 August. Are you an RBS or NatWest business banking customer? For example, cashback payments and switching incentives offered to bank customers to switch current accounts are not taxable. This project failed, as a result RBS must now offer Business Bank account customers money to SWITCH AWAY from them. Following the earlier bail-out of the Royal Bank of Scotland, the Bank is now being forced to get rid of many business customers and is providing payments as an incentive to move to various competitor banks. By switching your business bank account, you can often reduce the amount you pay in monthly fees by taking advantage of an introductory period of free business banking. The payment is an incentive. Is the payment for switching to a new business bank taxable compensation or something else? It has been set up to reward eligible Royal Bank of Scotland (RBS) customers who switch their business current accounts to one of the participating banks. As part of the disinvestment of NatWest and RBS business customers (following the Government buyout of RBS 10 years ago), incentives are being offered to business customers to stwitch banks away from RBS/NatWest - in the case of small businesses £1000 and larger businesses £25k. Apparently this is all being over seen by Banking Competition Remedies Ltd. Would I have to assume vat had been paid, and really it's only £2500 I receive, and then 19% of corporation tax off that? Royal Bank of Scotland (RBS) has announced today that it is offering new and existing customers £175 to switch their main bank account to the high street bank before 20 April 2020. The RBS have put aside £275m to be paid as incentives when a business transfers to one of the qualifying challenger banks (including Yorkshire Bank, Santander, TSB, Metro, Handelsbanken). Royal Bank of Scotland’s (RBS) incentivised switching scheme, also known as the ‘Business Banking Switch’, is for selected business banking customers and launched on 25th February 2019. The Business Banking Switch also known as the Incentivised Switching Scheme is a scheme which makes available a range of specialist offers (e.g. Already a TSB customer looking to start your switch? Are you an RBS or NatWest business banking customer? HP gave me £150 cash back for purchasing a laptop. Bank Rewards e.g. Hi. It’s designed to increase competition in UK business banking and decrease RBS’s market share. Matthew Young, a long standing connection of ours from his RBS days, who is now with Yorkshire Bank came in to see us earlier this week and shared his insights and a great deal of detail about the planned switch. Customers that choose to switch as part of Business Banking Switch must apply to open a new business current account with a participating bank by 28th February 2021 at the latest. How to get back control of self assessment, The TaxCalc Survival Guide to Self Assessment, The ultimate guide to starting up in practice. The Business Banking Switch scheme is part of RBS' commitment to HM Treasury and the European Commission to encourage competition in the UK small and medium-sized enterprise (SME) business banking market, as a result of the state financial support it … Great news – these are also not taxable income so does not have to be in the tax return. Previously, it meant that business and commercial customers of Royal Bank of Scotland in England & Wales were due to become part of a new bank, Williams & Glyn, but this is no longer going ahead. We cannot switch savings accounts or ISAs. Click through on Starling Bank’s offer and give consent for us to contact you. To check if you’re eligible and what incentive you could receive go to the RBS Business Banking Switch page. RBS business customers have been given an extra six months to switch to rival banks under the Incentivised Switching Scheme (ISS). Standing order payments on non working days. The scheme has been designed to provide offers that are better than those normally available on the market, such as free banking and cash incentives. The move was announced today by Banking Competition Remedies Limited as it became clear the state-owned Royal Bank was struggling to shift the targeted 120,000 clients from its books by 25 August. So effectively the Govt is giving customers £750 or more and then promptly taking 19% back. Is ITTOIA 2005, s 25 (or CTA 2009, s 46 for a company) at all useful to you. Business Banking Switch is an incentivised switching scheme. https://www.accountingweb.co.uk/any-answers/taxable-incentive-from-rbs-t... Incentive to switch away from RBS/NatWest business banking taxable? From today RBS business bank account holders are set to benefit from the £775 million bailout package following the award of funds on Friday to the nine challenger banks. We may require you to open a fee free loan servicing account and will confirm if this is required as part of the switching process. In theory everything is taxable in some way.. No income tax or CGT at all.. the only tax you could get is on the balance related interest if its Net.. but that's standard and not linked directly to the incentive.. 3. If you are a Royal Bank of Scotland customer, and your business has an annual turnover of less than £25 million, then you may be eligible for incentives to switch your banking to another provider. ROYAL Bank of Scotland (RBS) will pay you £175 to switch bank accounts to it - and existing customers can the perk too. As we know the UK Government offered financial support during the Credit Crunch, as a result RBS were due to setup a new bank called "Williams & Glyn", to increase customer choice. The slow progress of the switching scheme is only the latest problem to have beset the 10-year effort to increase competition in the business banking market, where RBS remains the largest provider. There was a brief discussion here. Quite a lot! This project failed, as a result RBS must now offer Business Bank account customers money to SWITCH AWAY from them. The Royal Bank of Scotland Group Plc (RBS) has launched an incentivised switching scheme to encourage some of their business customers to switch to another bank. Tax implications for borrowing from family? Are you eligible for a reward for changing your bank? As part of that application, switch a non-RBS account to your new RBS account (using the Current Account Switch Service). Just seen they are paying up to £750 in some cases. Great news – these are also not taxable income so does not have to be in the tax return. 08/03/2019. Speak to one of our specialist business banking Partners to start your switch today on 0345 835 3858. Incentive to switch away from RBS/NatWest business banking taxable? Given we have about £40 left in the two accounts that would be a decent rate of return. Please be advised that in order to qualify for the incentive payment, your account switch from RBS needs to be complete - meaning both that a business current account has been opened with Metro Bank and your old account with RBS closed. We will then use these funds to repay any outstanding debt with RBS/NatWest. As we know the UK Government offered financial support during the Credit Crunch, as a result RBS were due to setup a new bank called "Williams & Glyn", to increase customer choice. The Royal Bank of Scotland Group Plc (RBS) has launched an incentivised switching scheme to encourage some of their business customers to switch to another bank. While the exact details of which banks will be eligible for the funding and how they will apply the funding are yet to be confirmed, we do now know how the money will be allocated to the banks. Many business owners are still in the dark about the Business Banking Switch Scheme, so let us explain what the new incentive means for SMEs. Any other products you have with your old bank will not be moved at the same time. The European Commission agreed measures against RBS to minimise distortions in competition that resulted from the bail-out, mainly to promote greater competition in the SME banking market (for businesses with annual turnover of  £25 million or less). To check if you’re eligible and what incentive you could receive go to the RBS Business Banking Switch page. Switching to a Royal Bank of Scotland Business bank account; ... You are able to switch your Business Current Account or your business banking to another provider while retaining your business loan with us. Bank Rewards e.g. Please be advised that in order to qualify for the incentive payment, your account switch from RBS needs to be complete - meaning both that a business current account has been opened with Metro Bank and your old account with RBS closed. Bank charges are deducted pre-tax. Launched in February 2019, it’s been set up to reward eligible NatWest customers who switch their business current accounts to one of the participating banks.. £4,000 cashback will be paid for switching your Account to us, subject to the terms and conditions below. I'm not aware of any case law that says whether they are taxable or not, or on what basis, but my personal guess is that they would be held to be taxable as part of the business's income. The Current Account Switch Service is a free service that lets you switch a business current account from one participating bank to another – in 7 business days. The first payment is at 5 months and the second at 13 months after moving your banking to Handelsbanken. It's basically the same as if xxx amount of cash was paid into the account over the counter. cash back) for a certain group of customers to move their banking from NatWest or Royal Bank of Scotland to participating competitor banks. This appears to be because Barclays themselves highlighted the tax treatment of their Barclays Blue Rewards current account. That's not taxed either. While our accounts will remain the same for eligible RBS customers, they will receive an incentive payment when they switch. Can you please advise how to tag this payment and if it would be classed as a form of income therefore taxable? Joint accounts can be switched, as long as both parties agree to the switch and you are switching to another joint account. Speak to one of our specialist business banking Partners to start your switch today on 0345 835 3858. Launched in February 2019, it’s been set up to reward eligible NatWest customers who switch their business current accounts to one of the participating banks.. 2. If eligible, you could receive incentive payments for switching your banking to Handelsbanken. However, it does not appear to be compensation, but more an inducement payment. Got a letter from RBS this morning actually, the "Business Banking Switch" (away from RBS) is to launch in Feb next year. The details are here... https://businessbankingswitch.rbs.co.uk/# The payment to me will be about £3000. https://businessbankingswitch.rbs.co.uk/# The payment to me will be about £3000. Instead, an incentivised switching scheme – Business Banking Switch – was approved by the European Commission. If so, you might be able to switch your account to us under the Business Banking Switch scheme. My logic being that previous bank charges and interest were tax allowable, so the receipt of a sum to compensate for the previous charging / service should be a taxable business receipt in some form. There is limited information online at: https://businessbankingswitch.rbs.co.uk/about. Find out more. Log in to online or mobile banking at least once by 30 December 2020. The scheme allows eligible RBS customers to make an incentivised switch from RBS to a participating bank. There is much said about the tax position of cashbacks and incentives for individuals but little mentioned about businesses. My recollection is that it is an annual payment. As a condition of the government providing financial support to Royal Bank of Scotland (RBS) in 2008, the state-owned bank is now preparing to hand over £6 billion in customer deposits and £4.2 billion in loans to challenger banks, known as the ‘business banking switch scheme’. Target RBS SME customers are now able to switch their business current accounts and loans to ‘challenger’ institutions. Find out more. The switching incentive is open to customers who make RBS… If you meet the criteria, RBS will pay your bonus directly into your bank account by 29 January 2021. Pay in at least £1,500 by 30 December 2020. We cannot switch savings accounts or ISAs. Only for current RBS Business Bank Customers. ROYAL Bank of Scotland (RBS) will pay you £175 to switch bank accounts to it - and existing customers can the perk too. It is not clear to me how this "Business Banking Switch" receipt should be treated, but I would assume that it is a taxable receipt as it relates to the client's business activities. Considering it from an accounting basis and then looking at why it would not be taxable seems the obvious way to look at the problem - now that you've pointed it out! Whilst for an individual you look for what provision makes it taxable, with a business you look at the constituents of the business profits per the accounts and look for what provision might make it not taxable. More important ,any idea of amounts they are paying to account holders? According to RBS guidance, most of their SME customers that were due to bank with and transfer to Williams & Glyn will be eligible to take part in the Business Banking Switch. The ISS is to encourage up to 200,000 RBS and Natwest business banking clients to switch their accounts to the challenger banks to ensure RBS meet the EU competition rules set down following the governments £45billion of RBS in 2008. https://businessbankingswitch.rbs.co.uk/about, How to get back control of self assessment, The TaxCalc Survival Guide to Self Assessment, The ultimate guide to starting up in practice. Accordingly, a “Business Banking Switch” has been established by RBS in order to comply with this directive and provides a funding package to eligible “challenger banks” in order to incentivise eligible SME banking customers to switch their accounts and loans away from RBS. Any ideas what this payment would be accounted as? As a result, we made a commitment to help increase competition in UK business banking and decrease our own market share. The amounts involved are too trivial for anyone to have tested it, I would guess. Loyalty Commission See how Royal Bank of Scotland could help your business, from business bank accounts, business lending and other everyday banking services. We will then use these funds to repay any outstanding debt with RBS/NatWest. Martin Lewis reveals how to compare and switch to the best bank accounts that can save you £100s a year. Pay in at least £1,500 by 30 December 2020. Eligible customers must have a turnover of £25m or under (at an individual company level). I have had my business banking with NatWest for a number of years and noticed that the recent junk mail seemed to be about switching to their competitors. Banks must deduct tax at 20% before paying you the cash reward, and the gross amount of the cash reward is taxable. It might sound a bit strange, but it’s a legal requirement that RBS do this to help increase competition in the UK business banking market. Business Banking Switch is an incentivised switching scheme. It might not be taxed because it is a Government backed incentive to move customers out of RBS. The Scottish bank has written to 220,000 of its customers, openly admitting that it is an odd request for any commercial organisation, asking its customers to take business elsewhere. It is taxable. This includes up to £350 million for an Incentivised Switching Scheme to provide funding to other banks, in order to incentivise RBS’s SME banking customers (particularly Williams & Glyn) to switch their primary business current accounts and borrowing facilities to other banks. Needed to be reported as 'other income' to get the strictly correct tax result. Banks do not have to deduct tax before paying you the cash reward, so you receive these rewards gross and the gross amount is taxable. Bank switching incentives. Submit your tax return with FreeAgent FreeAgent accounting software can help you meet the Self Assessment deadline on 31st January. By switching your business bank account, you can often reduce the amount you pay in monthly fees by taking advantage of an introductory period of free business banking. Apparently "the scheme is designed to provide you with offers that are better than those normally available on the market". I'm curious what people think the tax treatment of this would be. RBS (and I think Natwest) are offering switching bonus to move some customers away from them. Which unfortunately it wasn't. Loyalty Commission. Any other products you have with your old bank will not be moved at the same time. This cash is being split between a payment to the business to cover switching costs (£75m) and a "dowry" to the other bank (£275m) that the bank can choose how to use for the benefit of the ex-RBS customer. And it’s completely free as long as you retain your business current account with us. 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