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Reward your staff this Christmas

with HR:4UK’s Tax Paid Gift Card

 

 

Christmas is about giving and at this time of the year, many business owners are considering whether they should give their employees a bonus or a reward in appreciation of their contribution to the business.

It has long been established that non-cash rewards motivate staff more than cash paid as part of their wages, simply because employees are generally less likely to remember what they spent the cash reward on.  A very small number of employees will actually spend the cash on something special for themselves.  Sadly, more often than not, cash rewards when paid as part of wages are absorbed into paying for day-to-day groceries and household bills, which is hardly memorable for the employee.

While cash is the most straightforward, safe option for an employer as it is often added to employees’ pay, unless it is a large sum, it is scarcely noticeable, particularly when tax and NI contributions have been taken into consideration.

So how can you reward your staff so that they can have the full benefit of the reward, the answer is by giving a non-cash reward and HR:4UK has a cost and tax effective solution by using our HR:4UK’s tax paid reward scheme.  

Businesses need much greater accountability about what and how they pay their employees and account to HMRC for any rewards given to their employees.  HR:4UK’s tax paid reward scheme is registered with HMRC which allows us to process the tax and NI contributions on your behalf which saves you time by not having to complete any paperwork or additional tax returns to HMRC – we do it all for you!

The cost of giving your employees a tax paid gift card through HR:4UK’s tax paid reward scheme in comparison to the gross cost of giving cash in wages including tax and NI contributions gives you a saving of 19.25%.

Non-cash rewards can be significantly more affordable and efficient, not to mention highly effective in motivating your staff.  Our multi-store gift cards can be used at many of the nation’s favourite high street stores across the UK both in store and online.

So how does it work?  Let me explain ….

Let's assume that you would like to give an employee a reward of, say, £100.   If, you choose to pay the £100 in the employee's pay, in order for the employee to have the full benefit of the £100 you would have to add the employees National Insurance and the employees tax to the £100.  In addition, you will still be liable for the employer's tax.  The total cost to you will be £167.35.

If you were to pay the employee £100 in the employee’s pay without taking into consideration the tax and NI deductions, the employee would only receive £68 of that £100 bonus because of the employee tax and NI contributions deductions.  Similarly, you would still be liable for the employer's tax.  

However if you choose to pay the £100 by way of our multi-store gift card  through our tax paid reward scheme,  you will receive an automatic discount of 5% immediately saving you 5%.  

You would still be required to pay the tax and NI contributions on the gift but this would be at the reduced rate of £95 (rather than tax on the full amount).  It follows that the NI contribution would also be on the lower amount of £95.   As such, the total saving to you is 19.25%.  

So that you can see "at a glance" using the example of £100, you can see the comparison showing the difference in the costs and the savings, between paying a reward by way of cash or by way of our multi store gift card. 

 

Illustration

 

Description
Cost through pay
Cost through gift card

Cost of gift/cash to employer

£147.06 £95.00
LESS Employee's tax @20%     £29.41 Nil
LESS Employee's N.I. @12%     £17.65 Nil
LESS Employer's N.I. @13.8%    £20.29 Nil
LESS Tax through HR4UK scheme    Nil £23.75
LESS N.I. through HR4UK scheme        Nil £16.39
Total REAL cost  to employer of gift     £167.35 £135.14
     
Saving     19.25% £32.22

 

In a nutshell, the savings come from the automatic discount and accounting to HMRC in terms of tax and NI contributions in the correct way and on the reduced amount.
 
In addition to this, under the terms of the tax paid reward scheme, HR:4UK pay the tax and NI contributions to HMRC and file all the necessary tax returns with HMRC on your behalf. The gift also does not have to be declared on a P11D.   HR:4UK takes away the hassle factor of dealing with HMRC as we do it all for you.

It couldn’t be simpler!

If you place your order contact us by requesting a personal quotation, click here or you can email incentives@hr4uk.com for more information.