Some types of current account rewards are taxable. Monthly cash payments, for example, can be classed as annual payments or, if you pay a fee to receive them, miscellaneous income. Banks should deduct 20% tax before you receive your annual payments – although you will need to pay more tax on them if you are a higher-rate taxpayer. Miscellaneous income, meanwhile, is paid before tax, meaning taxpayers may need to declare it. Other types of rewards, such as cashback switching incentives, are classed as discounts and are not subject to tax.