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Staff incentives could expose employers to Revenue fines

Employers and their staff could be leaving themselves open to fines from the Revenue & Customs for failing to report non-cash incentive and award schemes.

Many employers are not aware that there are no lower limits on reporting non-cash rewards. All incentives, even bottles of wine or similar small gifts need to be reported to the Revenue.

This rule includes incentive schemes provided by third parties. Competitive sales-driven business often rely heavily on incentive schemes and awards due to there positive impact on bottom line figures.

Direct employers and third party providers can elect to pay the tax liability for employees. Under a PAYE settlement scheme, the employer can elect to cover the tax element of the award. The employee has no further need to report.

However, taxed award schemes (TAS) allow third parties and employers to enter into special accounting arrangements for non-cash awards.

Award providers can decide to pay basic or higher rate tax on the grossed up value of the awards.

The employee will be issued with a certificate and a tax credit for the amount paid. In the case of a higher rate tax employee if the award provider has elected to pay tax on the reward at basic rate then the employee will be left with a tax liability.

A standard P11D form allows employers to just report all non-cash incentives and leave any possible consequent tax obligations to the employees.

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