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Tax treatment of income earned on a customer referral scheme.
An energy supplier’s ‘refer-a-friend’ scheme offers an existing customer a £50 account credit if a friend switches to the supplier by way of the former customer’s personal referral link. Guidance suggests that if that credit is kept in their account and not withdrawn it is not taxable. That probably seems correct. However the indication is that when transferred to a customer’s bank account the credit becomes liable to income tax. Is that likely to be correct?
There is also the situation when a customer sets up a website and social media accounts specifically to encourage referral uptake. If there was any doubt before this ‘commercial’ activity may seal the deal as far as making it taxable but again I am interested to hear what Taxation readers think.
Query 19 160– Customer.
Reply by Annette Morley
To analyse Customer’s problem let’s...
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