Tax-free rewards

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 ‘.