It’s the employees that keep companies in business and when they’re well rewarded they work harder, smarter and stick around longer but can companies take advantage of tax-free rewards? The simple answer is yes, tax-free rewards are available. Not many companies realise that It’s easy to reward staff for their hard work and save money at the same time with tax-free rewards.
Employees who feel valued through company recognition schemes are more productive, engaged and loyal to their business.
Under current UK law, everyone is entitled to £50 tax-free benefits for a range of reasons that don’t relate to the employee’s performance in their role. These type of tax-free benefits are called “trivial benefits” and represent a great opportunity for Employers looking to save on Benefit in Kind tax.
Here are a few examples of tax-free rewards:
● Wedding gift
● Bereavement
● Get Well
● Wedding Anniversary
● Cheer up
● Passing driving test
● Gained qualification
● Becoming a parent
● Good deed
● Birthday
● Christmas Gift
● Easter
● Ramadan
● Diwali
● Hanukkah
If a company spending £100,000 stopped giving financial recognition for taxable reasons (e.g. Long Service, Sales targets, values-based recognition) and instead gave reward say on every employee’s Birthday then the Employer would save typically 30% of their tax bill, in this scenario saving £30,000 per year! These tax-free rewards are simple but powerful and can be easily administered using Each Person due to having to choose the ‘reason’ from a set of options which categorises the recognition and reward is given.
Any of these reasons can be used when sending an ecard through Each Person. Whether you’re simply sending a nice message or adding epoints or a product or gift any of these benefits allow tax benefits for the above reasons saving your company valuable finance. This way of administering workplace rewards gives Employers a full audit trail of their tax liability which is a huge benefit when completing PSA agreements for HMRC. Employers save time but crucially can save thousands of pounds each year due to how they classify their reward making them tax-free.
Here’s another blog you might like: ‘ How to ask for a raise at work ‘.
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