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Most banks offer cashback or additional interest rates for customers having/switching current accounts with them. Often these accounts require a minimum monthly pay-in. I have read personal finance websites pointing out that say with accounts A and B, one can set-up standing order of say 1000 GBP from A to B and a standing order from B to A the next day. This way the bank requirements will be satisfied, although the net credit in the account stays the same. My understanding is that this is perfectly legal and in no way an act of fraud. (full description here)

Now, I have a sister who is currently looking for work and is claiming job seekers' allowance. My understanding is that such allowance are only awarded to people making less than a certain level of "income".

My question is, if I were to set up the standing order scenario outlined above, with account A being my account and B being her account, is she considered to have an income of 1000 GBP per month and spending it by giving it to me? Will this be considered a short-time loan? All in all, will this potentially affect her eligibility for receiving job seeker's allowance.

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  • Essentially you are gifting her 1000 GBP and she is gifting it back, right?
    – Nosrac
    Mar 21, 2017 at 12:32
  • That would be correct. Mar 21, 2017 at 12:39
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    Why not just open another account for yourself to do this with, rather than introducing legal complications with another individual? Mar 21, 2017 at 12:56
  • @GaneshSittampalam bingo! yeah so the option would be to gift her a one-off 1000 pounds to keep in another account of hers (with another bank) and then she can do the standing orders arrangements with her two accounts. feel free to add this as an answer. Mar 21, 2017 at 13:08

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I don't think it would be counted as income, and if it's a short-term loan it doesn't really matter as the notional interest on the loan would be negligible.

But you can avoid any possible complications by just having two accounts in the name of the person trying to get the account benefits, particularly if you're willing to just provide the "seed" money to get the loop started.

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