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What is cashback, is it legit, is it taxable, and where can you find it?

If you’ve got any of these questions about cashback, this is the place to get your answers!

If you’ve been reading my extra income posts, you’ll have seen that cashback is a consistent feature of our money-saving strategy for years. Lots of people know about the most popular cashback sites, but there are actually lots of other, smaller sites and opportunities to grab some cashback.  

Scroll down to read about the top cashback sites and some of the ways that we make our shopping work for us!

What is cashback anyway?

Cashback is a cut of the commission on a sale that is returned to the customer.

You can get cashback from cashback websites or credit card companies, or your banking institution.

Is cashback legit? Is it a scam?

Cashback is a legitimate form of rewarding customer loyalty or incentivising purchases. It’s often offered by third party websites or financial institutions rather than the merchants themselves.

Is cashback a scam? No, it’s not, but that doesn’t mean that scammers can’t use the lure of cashback in their schemes. If you take up a promise of cashback offered by a financially unstable company, then you can get caught out. It’s important to use reputable, stable cashback companies. I prefer to withdraw my cashback as soon as I can, instead of letting it accumulate longer than necessary.

Why would a company share their commission?

Well, by sharing in this way, websites can entice more customers to use them as a middleman, thereby generating lots more income in the form of commission as well as bonus payments from retailers. Credit card issuers can also entice customers to choose their card over another, thereby generating lots of income from merchant fees.

Cashback websites

When you shop online, you can use a cashback website as a middleman between you and the retailer. The cashback website receives a commission for sending you to the retailer, and then gives you a rebate on the commission that they’ve received for sending you to the retailer.

How does this work?

By using affiliate links to track your clicks, websites earn payments when you click through to a retailer’s website and make a purchase. Cashback websites are basically huge repositories of affiliate links that pay you back a bit of the commission they earn.

There are lots of websites to choose from, but the biggest and most reliable in the UK are TopCashback* and Quidco*.

I’ve found that newer cashback sites tend to pop up from time to time (and they try to get a mention on the blog), but it’s hard for them to gain a foothold with the big two sites taking up so much of the market.

Tips for using cashback sites

1 – Just remember to shop as normal.

Don’t buy something you wouldn’t ordinarily, or that isn’t the cheapest deal; cashback can be declined, or may not track properly.

Both of these have happened to me. On the whole, the amount I’ve saved has made events like these negligible.  

2 – Reduce the chance of cashback failing to track.

To reduce the chance of cashback not tracking properly, be aware that these sites use cookies to trace traffic to retailers. When in doubt, we clear the cookies on our computers before clicking through to a merchant – belt & braces.  

3 – Withdraw your cash regularly.

Don’t leave it to accumulate beyond the minimum payment threshold – I never do this for anything! Get your money out as soon as you can!

Credit card cashback

How credit card cashback works

Credit card cashback schemes work a little differently but achieve the same end. 

Merchants pay a commission fee to the credit card issuer when a customer makes a purchase using their card; a cut of this commission is returned to the customer. Prepaid card and debit card cashback offers work in the same way.

Is cashback taxable?

No, it isn’t. Cashback is not taxable because it isn’t income. It’s confusing because we hear people talking about “earning cashback”, and even I do refer to it as something that we’ve “earned”… and yes, you do have to go out of your way to get those deals or click on those affiliate links.

However, cashback is a discount on your purchase, not a payment or a form of passive income. That’s why it’s not taxable.

How can you earn more cashback?

You can stack your cashback – get more than one cashback payment from more than one source – when using your cashback card via a cashback site.    

More ways to get cashback that you might not have thought of!

There are a few big companies in the UK that are dedicated to cashback, and I’ve talked about these in my posts, but there are actually many other ways to generate cashback that you might not have considered.

Here’s a quick rundown of cashback opportunities you may be interested in.    

Bank accounts & debit cards

Check out what you could be getting from your bank account:

• Lloyds Everyday Offers – opt-in cashback offers.
• Halifax Cashback Extras – opt-in cashback offers.
• Bank of Scotland Everyday Offers – opt-in cashback offers.
• NatWest & RBS Reward Account – cashback on household bills
• Santander 123 &123 Lite – cashback on household bills

For Lloyds, Halifax and Bank of Scotland, you have to opt-in to their cashback programs, activate the cashback offers available to you, and use your credit or debit card to continue to receive offers.

Credit cards & prepaid cards

Credit card cashback offers come and go – it’s worth keeping an eye on what your card issuers are offering.

Curve is a mobile wallet that connects to your existing credit and debit cards and offers cashback at selected retailers for the first 90 days.

Apps

• CheckoutSmart
• Quidco* Clicksnap
• Shopmium*

Check out my post on cashback apps for a more detailed look at these.

Occasional Cashback – Purchase Incentives

Ok, so purchase incentives aren’t strictly cashback, but fall somewhere closer to cashback than they are to loyalty points, and can be processed and received even quicker than ‘real’ cashback.   Recently we’ve done well from cashback offers from Zeek, like 10% back on every £100 spent, as well as from Amazon, which offered me £5 back if I topped up my gift card balance to £100.   I did – a free £5 for no hassle. I was going to spend that £100 anyway – yes, it was budgeted – so the offer was much appreciated. With both of these, you end up receiving a credit to spend with the company, so it benefits them – make sure it’s of benefit to you.

What is cashback? It's a percentage of a sale value that is returned to you. Share on X

That’s my take on the cashback sites we use – I’m sure I’ll remember even more and so I’ll be updating this post with more sites and offers. What about you? Any suggestions of your own?