01785 243276 admin@howardsca.co.uk

The UK’s coronavirus vaccination programme is in full swing. More than 23million people have received a jab. Ultimately, the programme will help us get our lives back on track. Yet, the pandemic continues to create challenges.


Tax implications of rewarding employees

Across all sectors people are pulling together. Often, employees simply get on with the job. In some instances, they go the extra mile. Grateful employers are keen to show their appreciation. But how do you go about it? Perhaps an away day at a theme park? Indeed, it’s a nice gesture. But beware, there are tax considerations.


Tax benefits

This kind of thank you is treated as a tax benefit. As such, it’s subject to tax and National Insurance (NI). This is because it’s deemed a one-off event. So, the activity can’t be treated as staff training. Neither can it be considered part of the staff entertainment annual allowance.


Paying tax and National Insurance

Go ahead with the away day and you’ll need to account for tax and NI. Arrange with HMRC to pay through a PAYE Settlement Agreement. This way, you won’t have to complete a P11D for the employee tax. Similarly, there’s no requirement to fill out a P11Db to cover National Insurance.


Look at alternatives

Fortunately, there are alternatives. Simply look at things differently. Don’t arrange a thank you for work completed. Instead, give employees a voucher for the theme park. Link it to an occasion, such as Easter. Or the employee’s birthday, perhaps. Limit the voucher to £50 in value. This way, saying thank you is easy. You avoid the tax implications of rewarding employees.


Mitigating tax

In the current climate, conscientious staff are making a difference. It’s understandable that employers want to reward them. Think carefully about how to say thank you. Get it right and neither employer nor employee will pay tax or National Insurance.


You can avoid the tax implications of rewarding employees. For advice call us on 01785 243276 or email admin@howardsca.co.uk


More advice on the tax implications of the Spring Budget

Read our blog for a full overview and downloadable report on the Spring budget