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Sage: How to support your staff and keep the tax man happy!

Engagement | Benefits | Sage Employee Benefits | 5-minute read

Posted on: Tuesday October 03, 2023

by Viki Bell

How to support your staff and keep the tax man happy!

Using your benefits platform, it’s easy to help your staff over this festive season by adding funds to their accounts which they, in turn, can exchange for an e-voucher to spend where they like.

Simply top-up your float, and help your staff spread the costs of Christmas using their Sage Employee Benefits app. You choose the amount, and your employees choose when and where to spend it.

Pros and Cons…

 There are lots of benefits to thanking your staff and showing recognition on a regular basis:

  1. 31% lower voluntary turnover (1)
  2. 85% see a positive impact on employee engagement (2)
  3. 12x more likely to have strong business outcomes (3)
  4. The #1 reason people leave their jobs is lack of recognition (4)
  5. Recognition for work is one of the top drivers to attract new staff (5)

However, are you aware of the rules to ensure you don’t inadvertently trigger a tax and national insurance liability for your employee (and your payroll team)? By keeping the value to £50 or under and sending as a Christmas Gift, you can help your staff and potentially avoid additional reporting needs by using Trivial Benefits rules*.  There are however a few things to be aware of.  Rewarding your staff for a job well done or using the system for financial incentives could well fall into the P11D/PSA reporting and trigger tax and National Insurance implications for you and your employees*.  Similarly, if any one gift is more than £50 in value this too will trigger tax and NI issues. What is a trivial benefit?

HMRC introduced the term trivial benefit in April 2016. This allows you to gift staff small amounts to acknowledge special events, Christmas, birthdays, etc. But what are the rules:

A trivial benefit…

  • Must be given as a gift and not exceed £50 in value
  • Cannot be cash – or a cash voucher (such as a prepaid credit card)
  • Cannot be as a reward for their work or performance
  • Cannot be a contractual entitlement

Your award must meet ALL the above criteria to avoid tax and NI liability. If you’re not sure, the Government website has a helpline to answer all your queries.

The award must be given as a “gift” and not as an incentive or directly linked to a “job well done” or to add value to an employee’s pay package.

Of course, you can use your Reward area in Sage Employee Benefits to thank staff when they go above and beyond but you will then need to consider the P11D/PSA implications for both the employee and your finance team.

*Source: https://www.gov.uk/expenses-and-benefits-trivial-benefits

So, what can I do?

Help your teams spread the cost of Christmas with a £50 gift into their employee benefits app. Your employees can then purchase an e-voucher of choice that is only exchangeable for specific goods or services (and therefore not cash) so falls within the above criteria. And the good news, a trivial benefit is not just for Christmas, there are many other occasions you can mark throughout the year to help your teams - as long as they meet the above criteria.  Why not celebrate:

  • Birthdays
  • House moves
  • A new baby arrival
  • A new role
  • Welcoming to new employees
  • Bank holidays
  • And many more…

Why use Sage Employee Benefits and not simply buy gift cards?

Simple.  With Sage Employee Benefits it saves valuable administration time and drives employee engagement on your platform. Plus, and perhaps best of all, we pass the saving back to you. For example:

  • You gift each employee £50 into their Reward fund.
  • Your employee redeems the money for a £50 M&S voucher using the 6% saving within the platform
  • Saving made per employee = £3
  • Cost to you = £47.

You can see how this can quickly add up and – for a business with 100 staff – your float will be credited with £300.

But Sage Employee Benefits gives you more. If an employee does not use the e-voucher or leaves the business after a year (or upon employee leaving) any value left in their recognition pot will be paid back into your Recognition Float too.  Many other employee benefit platforms simply take these funds, and you lose out!

This five-minute OnDemand webinar takes you through how to set up Recognition and shows you how easy this is to reward your great teams. [link when available]

Summary

Celebrating with your staff with a small gift is a powerful tool. Not feeling appreciated is the #1 reason people leave their jobs. Saving you time and money on recruitment and making you an employer of choice.  Get in touch to find out more.

CliniSupplies, a Sage Employee Benefits client, achieved 95% activation levels on their platform by using Recognition.  Boosting morale, driving engagement, and building better business. Check out their great case study.

Phone: 01908 751 211

Email:    welcome@sageemployeebenefits.com

 

References:

  1. Bersin by Deloitte
  2. SHRM Globoforce Employee Recognition Survey (when spending 1% of payroll)
  3. Bersin by Deloitte
  4. Gallup
  5. Willis Towers Watson

Notes:

This blog provides our opinion only and does not account for some factors that may apply to individual employers.  You should ensure you take appropriate advice specific to yourselves before taking any action.

 

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