Survey Minimize
Are you a member of a Sales Association / Professional Body?

Submit Survey 


Professional Sales News

Current Articles | Archives | Search

20 January 2012
Rewarding your staff without incurring tax

Rewarding your staff without incurring tax

By Ben Turner @ 10:23 :: 3567 Views :: 13 Comments :: Article Rating :: Featured Articles
<< Back  l   

Incentivising is key in any sales environment where Sales Managers want to ensure they retain their top talent. Ken Craig, partner at Rawlinsons accountancy firm explains how to reward staff while side stepping the tax man. 

Nothing will replace a good pay scheme in terms of staff motivation, retention and attraction. Performance related bonuses which top up the pay packets of those sales staff shoring up your bottom line also have a valuable part to play.

However, cash rewards, whether they are commission payments, pro-rata related bonuses or an annual Christmas shopping voucher attract income tax. And that depletes the real value to the employee.
While HMRC isn’t known for its generosity, there is the opportunity to demonstrate yours to your sales force by taking advantage of legitimate tax concessions. Not surprisingly none of the tax free schemes are going to make your sales staff rich, but they may just help give you the edge over your competitors and demonstrate your commitment to your workforce.
The schemes likely to prove the most beneficial for you and your business are those which engage all staff, giving everyone the opportunity to earn a reward. An organised suggestion scheme works on two levels. Your company gets an injection of new ideas and everyone within the business can take part and potentially be rewarded.
To fall into the tax free bracket, rewards must be available through an ‘official’ suggestion scheme. The easiest way to tackle this is with clearly set out objectives – increasing sales, changing the organisational structure or encouraging team work for instance and a standard way of employees making suggestions ie through a suggestion box.
Under such a scheme, staff can net tax free rewards up to a maximum of around £5,000. To meet the criteria the actual figure should be based on a set percentage of the expected financial benefit of the suggestion to the business, so 10 per cent of the invoiced work for instance.
Encouragement awards are an ideal way to reward more junior members of staff. Cash payments are allowed but only up to the value of £25. Staff can party tax free – whether it be a Christmas celebration, summer barbecue or awards night. The bill per person must not exceed £150 though – and that must include such extras as taxis and overnight stays if the firm picks up the tab for those too.
Promotional gifts can be given to staff without the tax man being informed – although their value to each individual must not exceed £50 a year. You may wish to employ your discretion before dishing out the left over giveaways which have been sitting in the back cupboard since your last exhibition – promotional gifts are those which carry advertising and it may be that some staff aren’t entirely comfortable with receiving rewards which deliver the corporate message!
Sometimes it is individuals who deserve a personal reward rather than a team or group offer. While the days of the ‘golden handshake’ seem rather archaic in many sectors, for those who do notch up at least 20 years service there is the opportunity to reward their loyalty with a gift. Of course HMRC has put a value ceiling on the cost of that gift - £50 for each year of service. That does mean though that you can spend up to £1,000 on a special something for an employee celebrating a 20th anniversary.
Do bear in mind when spending that amount of money the recipient’s taste and lifestyle. The traditional gold watch may be well received by some, while others may prefer something more practical. If your aim is to say thank you, reward dedication and motivate the recipient for the next two decades the gift needs to show that you know your staff as individuals.
Celebratory gifts are also exempt from tax. In the strictest sense, all extras which employees receive, over and above their salaries and expenses, are subject to tax. However, HMRC does differentiate between gifts and benefits. Gifts might include flowers on the birth of a child, a bottle of wine to mark a birthday or – they do get a special exemption – a turkey at Christmas.
This level of reward probably won’t help you hang on to staff who are hankering after more cash, shorter hours or ‘a change’ - nothing is a substitute for a good pay scheme and working conditions.
Employee benefits shouldn’t be underestimated though, they can form an attractive element of an employment package – and prove advantageous to you as an employer.
Those little extras throughout the year can help foster goodwill among employees. They help with the ‘feel good factor’ in a workplace and are the kind of things staff mention to others who may be prospective employees of yours. They also help staff buy in to the company – seeing their suggestion implemented gives them a stake which increases motivation and morale.
And the good thing is – HMRC can’t tax any of that!
Rawlinsons is a firm of Chartered Accountants, Business and Tax Advisers providing a complete range of accounting, business, taxation and specialist services to more than 3,000 clients.
01733 568321
Email for more information.
  << Back Share/Save This Article:     Bookmark and Share
comment By mike33 @ 23 July 2012 23:28
I think there is so much that you can get from this as an employee here. I think this is so good to see that they are doing this for their employees. They will benefit so much from it. discount marine products

comment By dave @ 11 December 2012 06:19
Is it possible to avoid tax for such mere reasons? I am not so sure about this and found this as a totally illegal approach. I think you might better seek some legal expertise in this matter to avoid future dilemma.for more details

comment By kitapbigi @ 12 December 2012 17:51
These sales issues have to be maintained with proper management otherwise, this would complicate the total process. You have to design a standard procedure to solve the issues.evim şahane-20 dakika izle-chat-20 dakika-evim şahane-evim şahane-evim şahane

comment By ali @ 14 December 2012 05:30
Incentivising is key in C_HANATEC_1 dumps any sales surroundings where Sales Managers require to make sure they retain pass4sure C_HANATEC_1 their top talent. Ken Craig, partner at Rawlinsons accountancy firm explains how to passforsure C_HANATEC_1 reward staff while side stepping the tax man.

comment By zaidmodle @ 29 December 2012 06:28
Nicely presented information in this post, I prefer to read this kind of stuff. The quality of content is fine and the conclusion is excellent. Aware Constructions

comment By ahmad @ 31 December 2012 07:05
Nicely presented information in this post, I prefer to read this kind of stuff. The quality of content is fine and the conclusion is fine.

comment By rahman @ 01 January 2013 06:46
Work out how much you need to average per hour to be successful as a business

comment By rahman @ 01 January 2013 06:46
In the beginning you might need to start at a lower rate, but you can increase this as your

comment By rahman @ 01 January 2013 06:46
Nicely presented information in this post, I prefer to read this kind of stuff. The quality of content is fine and the conclusion is fine.

comment By rahman @ 01 January 2013 06:46
I admit with your Blog and I will be back to examine it more in the future so please keep up your act.

comment By bilal @ 04 January 2013 11:31
You done certain good points there. I did a search on the subject and found nearly all persons will agree with your blog. PETS&ANIMALS

comment By dexter11 @ 31 January 2013 15:32
im höchsten Grade veredelnd preis viagra Trennung der Agenden der Hoheitsverwaltung von. Assalilo nella battaglia dal telo effetti collaterali cialis e cosi forte si lacerava le unghie .

comment By dexter11 @ 04 February 2013 15:29
In Magnesia donò la casa di un cittadino al viagra online ad avere le più sontuose piscine che si vedessero . Zusicherung allem Anscheine nach nicht die Rede, tadalafil Die litterarischen Neigungen wurden auch von.

Only registered users may post comments.




Force Manager 15
© Copyright 2009 | DNN Hosting & SEO Managed by Pure Systems | Terms Of Use | Privacy Statement