Giving Back To Your Employees In A Tax-Efficient Way

If you employ staff in your business then the chances are you’re doing well and running and great business, so well done! When it comes to getting the most out of your staff, you’re probably well aware that incentivising them and rewarding them for a job well done is a good idea for their motivation and commitment.

giving-back-employees-tex-efficient-way

A happy workforce is a productive one. Amongst the ways you could nurture that happiness (which is increasingly becoming a recognised mental health bonus for all), is giving gifts to your employees.

And the best news is, there’s a simple way to ensure that your employee gifts are tax-efficient.

The £50 staff incentive

Staff incentives can be anything you like (with the exception of cash) up to the value of £50. You can be really inventive and creative with these and we’ve seen some great ideas involving employee gifts in the past.

Here are some ideas you could gift:

  • Vouchers for online shopping
  • Credits for music of film downloads
  • Wine or wine vouchers
  • Theatre or cinema tickets
  • A meal voucher at a local restaurant

Unlimited £50 gifts for employees

These £50 incentives are not only tax-free to you, but you can gift an unlimited amount to your employees so if you have a set of targets in your business or clients you want to target and win, you can get the competitive nature flowing in your company with some healthy competition and a little ceremony and gift giving when you reach those milestones.

Limited to £350 over a financial year for directors

You can also gift yourself with a £50 tax-free gift too but although these are unlimited for your employees, they are limited to £350 per year per director. But that does mean that 7 out of the 12 months of the year you can have a gift for your own targets and achievements.

Tax-efficient

Because these are fully tax-deductible in your company so they will reduce your profits and in turn your corporation tax, making them a really great way to incentivise staff whilst saving you on tax, too.

They don’t affect employee taxes

These little tax-free incentives for your employee have no Benefit In Kind tax associated with them either, so it won’t affect their take-home cash in their back pocket.

Linking-up with other businesses to make it go further

Here’s a marketing idea for your business (or for someone you work with). Why not get your £50 gifts from other companies or sell your £50 gifts into companies on the back of this great tax-efficient scheme?

If you’re a wine merchant, for example, you could offer a £50 case of wine with options for the lucky employee each month. Whilst they’ll appreciate the wine, they’ll also get to know about you as a business, and colleagues may want to spend with you, too.

Here’s an idea we use at Trinity:

Each month we offer a £50 voucher for a restaurant and give our lucky (or hard-working) employees the choice of which one. This then becomes an even better gift as they can spend it exactly where they want and potentially save themselves some money on a date night or a dinner out with friends or family.

It’s a real added bonus that you can give as an employee and it saves you tax and doesn’t affect your employees’ tax.

You could offer these incentives like this:

  • Employee of the month.
  • Salesperson of the month.
  • Productivity award.
  • Best customer review.
  • Most new clients secured award.
  • Most improved employee.
  • Award employees for passing exams or gaining accreditation.
  • Employee of the year / quarter
  • Or run an awards night once a year and gift out lots of lovely gifts.

Happy workforce, productive business

Aside from these £50 incentives being a very tax-efficient way to give back to your team they’re also a really great way to grow your business. It’s long-been documented that a happier workforce will be more productive and give better output and that then leads to a better business and more profits.

If you need any help or advice on this then please do contact us here.