Tax treatment of incentive scheme awards
11/11/2021

Some companies use incentive award schemes to encourage their employees in various ways. For example, to sell more of their own goods and services. The award can include cash-based, vouchers or other gifts.

Where an employer meets the tax payable on a non-cash incentive award given to a direct employee by entering into a PAYE settlement agreement (PSA), the award is not chargeable to tax on the employee.

With the exception of non-cash awards covered by a PSA, the incentive awards made to employees are chargeable as employment income. The value of these awards is calculated as follows:

Cash
The value to use is the total amount of cash awarded.

Vouchers
If the award consists of vouchers, then the value to use is the full cost to the provider of making the award.

Other gifts
If the award is something other than vouchers, then the charge is usually the full cost to the provider of making the award. There are certain exceptions for the very low paid.

There are also concessions which HMRC makes to enable you to say thank you to staff for specific areas including encouragement awards, suggestion schemes and to reward long service.


Contact us

Main Office
33a Portsmouth Rd
Woolston
Southampton
SO19 9BA
 
Tel: 02382 123 336
E:   This email address is being protected from spambots. You need JavaScript enabled to view it.
 
 

Hampshire

Satellite Office
The Old Bond Store
Back of the Walls
Hampshire
Southampton
SO14 3BH
 
Tel: 0345 222 1066 / 02382 123 336
 
 

Surrey

Satellite Office
16 Imber Grove
Esher
Surrey
KT10 8JD
 
Tel: 0345 222 1066 / 02382 123 336
 
 
 

Wartling

Satellite Office
Well House
Wartling Road
Wartling
Eastbourne
BN27 1RX
 
Tel: 0345 222 1066 / 02382 123 336
 
 

Visit Us

Monday - Friday 09:00- 1730​
Evening and Weekend appointments
are available on request​.
 
To make an appointment,
please email hello@genio-accountants
or call us on 02382 123 336.

Newsletter Sign Up

With our newsletter, you automatically receive our latest news by  e-mail and get access to the archive including advanced search options!

Newsletter Sign Up  |  Login

GoCardless