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Best bank accounts

Best bank accounts for cashback

By Chiara Cavaglieri

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Best bank accounts for cashback

If you want more from your bank, take a look at our table showing the best current accounts for cashback and other rewards.

Top current accounts for cash rewards

Many banks and building societies are offering cashback on monthly bills and loyalty rewards as an incentive to open or retain an account. We show the best offers in this table.

If you’re looking for a bank account with extra benefits such as travel insurance or car breakdown cover, see our online tables to compare the best – and worst – packaged bank accounts.

Provider Monthly cashback offer Extra benefits Monthly fee Customer score customer score help
Barclays Blue Rewards £7 £5/mth on Barclays mortgage; £3/mth on its home insurance; £1/mth on personal loans; £5/mth on life insurance; up to 5% cashback on shopping. £3 63%
£7/mth if you pay out two direct debits, no minimum funding required.
Coop Bank Everyday Rewards £5.50   - 71%
£4/mth if you pay in £800, pay out four direct debits, opt for paperless statements, log in to online/mobile banking, and stay within your overdraft limit. Plus, 5p per debit card transaction up to a max £1.50/mth.
Danske Bank Reward £7   £2 70%
£7/mth, if you pay in £1,200 and pay out three direct debits (available in Northern Ireland only).
Halifax Reward £3  New customers earn £125 for switching. This offer ends on 18 March 2018. £75 thereafter. - 65%
£3/mth if you pay in £750, stay in credit and pay out two direct debits. New customers earn £75 for switching.
M&S Bank Current Account £5 New customers get a £125 M&S gift card for switching. -

Which? recommended provider


New customers only: £5/mth added to your M&S gift card if you pay in £1,000/mth and keep two direct debits active (for first 12 months only).
NatWest Reward 2% on bills = £6.84* 1% cashback on shopping. £2 63%
2% cashback on up to seven household bills paid by direct debit if you pay in £1,500 every month.
RBS Reward 2% on bills = £6.84* 1% cashback on shopping. £2 57%
2% cashback on up to seven household bills paid by direct debit if you pay in £1,500 every month.
Santander 123 Lite 1-3% on bills =£6.36* 1% cashback on Santander mortgage (worth max £10/mth); 2% on Santander home insurance; up to 15% on shopping £1 67%
1-3% tiered cashback paid on household bills paid by direct debit as long as you pay in £500, pay out two direct debits and log in to online or mobile banking at least once every three months. The full Santander 123 account also pays 1.5% interest on up to £20,000, for a higher monthly account fee of £5.
TSB Classic Plus £10 3% interest on credit balances up to £1,500. Refer a friend and share £75 if they switch (until 5 March 2018). - 69%
Earn £5 cashback if you spend on debit card 20 times in a month and another £5 if you make two direct debits in a month (for accounts opened on or after 8 Jan '18, offer ends 31 Dec '18; for accounts opened between 1 Mar '17 and 7 Jan '18, offer ends 30 June '18).

* NatWest/RBS and Santander pay cashback on household bills; the figure shown assumes average monthly household bills of £33 (water), £94 (energy), £40 (mobile phone/data), £29 (landline/broadband), £18 (TV package), and £128 (council tax) 

Table last updated 15 February 2018

Customer score: General public score based on customer satisfaction and likelihood of recommending company to friend/family member. Customer scores are based at brand level. Customer scores are based on a survey of an online panel of respondents from the general public, who were invited to take part in the bank account customer-satisfaction survey during September 2017. The final sample size was 5,554.

Maximising current account rewards

Many providers ask you pay in a minimum amount each month or maintain a certain number of direct debits to be eligible for current account rewards.

In some cases, you may need to hold other products with that provider, such as a mortgage, personal loan, or insurance, to benefit fully. Compare rates to the rest of the market as you may be better off holding these products with other providers, even with the extra cashback.

Watch out for fees being increased, or benefits being chopped and changed. If they are, take the time to reassess whether the account is still working for you and consider switching if the benefits no longer stack up.

Do I need to pay tax on cashback?

Under the new personal savings allowance (PSA), basic-rate taxpayers can earn up to £1,000 in savings income tax-free, while higher-rate taxpayers get a £500 allowance.

The PSA applies to all types of savings income, including interest paid on bank and building society current accounts. Since 6 April 2016, banks and building societies have stopped deducting income tax from interest paid on both traditional savings accounts and current account.

It was designed to simplify the system, but it’s managed to create a fair amount of confusion – particularly when it comes to current-account rewards.

Current-account rewards are paid as an incentive to open or retain an account – not as a return on the money you deposit into the account. You aren’t earning interest, or any other form of savings income, so this money is not covered by the PSA.  

Q. Are current account rewards taxable?

Some rewards are considered taxable by HM Revenue & Customs (HMRC) and some aren’t. It all comes down to how the taxman categorises rewards for tax purposes. Broadly, there are three possibilities:

  • Annual payments: taxable and paid with basic-rate tax deducted at source
  • Miscellaneous income: taxable but paid without tax deducted
  • Neither annual payments nor miscellaneous income: not taxable and paid without tax deducted

HMRC explained to Which? that it would only expect current-account rewards to be annual payments if they continue for more than a year and the customer does not pay a fee for holding the account.

Cashback on household bills, offered by the likes of Santander and NatWest, are essentially a discount on goods or services, not income – so there is no tax to pay.

Q. Do I owe tax?

Both Halifax and The Co-operative Bank offer rewards that fall into the ‘annual payments’ category, which means they deduct basic-rate tax of 20% before paying rewards.

The gross monthly reward for the Halifax Reward account is £6.25, but you receive a net reward of £5. The gross monthly reward for the Co-op Everyday Rewards account is £5, but you receive a net reward of £4.

You don’t owe any extra tax if you are a basic-rate taxpayer.

Previously, Barclays Blue Rewards customers earning the £7-per-month Loyalty Reward were told to declare this to HMRC, via self-assessment, or by getting a new tax code. This reward was deemed to be a ‘miscellaneous payment’, because there is a £3 monthly fee.

In December 2016, Barclays reclassified this perk as cashback – to be precise, you earn £3.50 cashback monthly for your first two direct debit payments – to ensure that it is no longer subject to tax. 

All other Blue Rewards current account benefits have never been subject to income tax as these are also cashback deals for holding specific products (mortgage, insurance, loans).

Q. What if I’m a higher-rate taxpayer?

If you pay tax at higher or additional rates you should pay the additional amount over and above the tax deducted at source if you receive rewards with basic-rate tax deducted.

Q. What if I’m not a taxpayer?

If you are a non-taxpayer, you can reclaim any tax deducted by using the R40 form or on your self-assessment tax return if you complete returns.

  • Last updated: November 2017
  • Updated by: Chiara Cavaglieri

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