Monthly reward payments paid into your account are usually taxed by HMRC, as they are seen as annual payments, not interest on savings. If your bank doesn’t deduct tax at source from reward payments, you may have tax deducted via your tax code. If you already complete a self-assessment tax return, you may need to declare any taxable rewards in your tax return.
If you think you have overpaid or underpaid tax on rewards, perhaps because you are a non-taxpayer or higher-rate taxpayer, contact HMRC.
You won’t be taxed on cashback rewards on spending, and most UK savers don’t have to pay any tax on interest. The personal savings allowance (PSA) means basic-rate taxpayers don’t have to pay tax on the first £1,000 of their savings income, and higher-rate taxpayers pay no tax on the first £500 of their savings income. There is no personal savings allowance for additional-rate taxpayers.