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Taxing of incentive payments to switch bank accounts.
Our client a trading limited company has their banking and invoicing discounting facilities with Royal Bank of Scotland. The client has recently received a letter from the bank asking them to move their account as part of its ‘business banking switch’ scheme agreed with the government.
Under this scheme the bank will provide incentives to small business customers to leave RBS and move to another bank.
Our client has been offered £25 000 as well as a period of free banking with the new bank if they transfer their account. We have been considering the various ways that this could be taxed. Can Taxation readers comment on whether the receipt should be taxed as income or capital and might there be any reliefs that could apply here?
I look forward to hearing from readers on this subject.
Query 19 344– Windfall.
Reply by Bramble
Consider rules on loan relationships and miscellaneous income.
My understanding...
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