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Santander failed to notify me of an interest rate decrease on my student current account from 3% AER to 1% AER, which I noticed a few months after the change. I submitted a complaint to them over the phone, and they called me back a few days later to say that they would compensate me by crediting my account with £25, which was more than the lost interest over the period where I was unaware of the change, so I accepted it.

The £25 credit to my current account appears on my statement as an "account adjustment". My question is: how should I classify this sort of compensatory income in my books and on my self-assessment tax return, e.g.

  • interest from savings;
  • tax-free gift/goodwill from the bank, similar to bank account rewards;
  • miscellaneous income that is subject to Income Tax;
  • something else?
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  • "Interest from savings" seems to be what it is.
    – RonJohn
    Commented Nov 18, 2020 at 21:56

1 Answer 1

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Having now received my account summary / interest statement from Santander for the tax year concerned, it is clear that the £25 they awarded me is not classed as interest for tax purposes, as it is not accounted for in that statement. I have filed it in my books as goodwill received.

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