Tax Free incentives for employees | Boost employee loyalty

Tax Free incentives for employees | Boost employee loyalty

The ‘cost of living crisis’ is making it harder than ever to retain good employees.

Everyone is getting squeezed – with the necessities of life that we used to take for granted, like food, fuel and heating now costing everyone so much that many are worried about managing to pay their mortgage or rent.

Not surprisingly, people are cutting back on treats and luxuries and even skipping meals to help make ends meet.

In fact, the TUC put the figure at one in 7 Britons skipping meals due to the crisis, and the Money Advice Trust estimates that 5.6 Million people have gone without food as a result of the cost of living crisis and that 41% have already cut all nonessential spending.

Keeping good people is harder than ever

New job advertisements with tempting increases in salary and further career progression prospects are now attracting people who otherwise would not have dreamed of taking the risk to change employers, or even industry.

Many businesses face declining sales figures and margins as a direct result of the en-masse ‘tightening of belts’, making senior management reluctant to ‘bake-in’ large salary increases to overheads as they also deal with huge increases to their supplies, energy costs and finance charges as interest rates rise.

But with public sector pay demands and strike-action dominating news coverage, growing salary and package expectations are set to stoke disquiet in employees of all sectors, understandably hungry to provide for themselves and their families.

And this plays straight into the hands of recruitment agencies keen to entice top performers away from their established positions. 

So anything that employers can do to build positive workplace cultures and be recognised by their people as helping them in the face of all the current challenges is now essential to win the battle for keeping good people.  

– Especially if it can be achieved without incurring additional Tax and National Insurance cost obligations.

Not all staff incentives are taxable

Benefits seen as ‘Trivial’ by HMRC may actually be ‘Essential’ to your employees’ wellbeing…

Businesses would be wise to give proper consideration to leveraging the HMRC ‘trivial benefits’ tax exemption in these difficult times, and here’s a couple of ways to do this:

Firstly it is worth remembering that you don’t have to pay tax on a benefit for your employee, if all of the following 4 critical rules apply:

  1. It cost you £50 or less to provide
  2. It isn’t cash or a cash voucher.
  3. It isn’t a reward for their work or performance. So cannot be regarded as a disguised form of salary or wages
  4. It isn’t in the terms of any contract.

This is known as a ‘trivial benefit’. You don’t need to pay tax or national insurance or even let HM Revenue and Customs (HMRC) know.

However, you must pay tax on any benefits that don’t meet all these criteria.

And as long as the benefits comply with the rules above then there is no limit for each employee. (But for directors of close companies, the aggregate amount in one tax year is £300).

Our prepaid ‘contactless’ Mastercards are ‘non cash vouchers’ (you can’t take cash from ATMs etc ).

  • Can very cost effectively deliver your £50 benefits
  • Can be used in over 30 million places around the world, including online.
  • GooglePay and ApplePay compatible (so loaded into your SmartPhone wallet)
  • Plus they are more appreciated than small bonuses in salary payments, which simply ‘get lost’ in the family weekly spending.
  • And can be used to deliver larger rewards under your PAYE Settlement Arrangement (PSA)

A text message to re recipient tells the card holder as soon as a bonus has been credited to their account and is ready to spend.

Examples of trivial benefits delivered via the cards (trivial to HMRC, but highly valued by your people) may include:

  • Employee wellness bonuses.
  • Gym memberships
  • School holiday activity budget
  • Have lunch on us
  • Happy birthday!
  • Congratulations (for a family event – eg birth)
  • Cold weather contribution
  • Remote team building event
  • Congratulations for passing an exam
  • Health & Safety bonus
  • Great ideas

The list is literally limited by your own imagination.

You already know that each award will be very appreciated by those receiving it, and with no tax or National Insurance to pay, this must be the most cost effective way to make a difference to your people.

And you will prudently not be setting a precedent/contractual obligation that may become an unsustainable overhead should business finance pressures ‘tip the balance’.

Businesses with smaller numbers of employees – or a lower budget to get started, can opt to use our ‘off the shelf’ BONUS card, without sacrificing the GooglePay / ApplePay benefits.

But if your business has 200 people or more, your company’s own branded Mastercard and cardholder ‘App’ – which people can store in their Digital Phone’s GooglePay or ApplePay Wallet, will reinforce your position as an impressive and caring employer.

Our prepaid cards can also be used to help your people manage their expenses, so that they can save their personal cash-flow from the need to lend your company money, until their expenses have been reimbursed.   

As you would expect, our cards management ‘Bonus Administrator’ interface enables new cards for new employees to be easily ordered, awards to be distributed and records of everything to be kept. 

To discover more about our prepaid card solutions send an email to support@performancebonus.com or telephone our office on 01291 623355.

Share this post