6 Reasons Why Businesses Should Give A Gift To Employees Using HMRC’s Tax Exemption This Xmas

Bonuses are often far from the top of a business’ list of financial priorities, but a new tax exemption has made giving employees a gift worth up to £50 cheaper and easier than ever to give out – and those who do stand to make both financial and organisational gains.

Last year, HM Revenue and Customs announced gifts or benefits for employees of up to £50 per employee which fit their criteria can be given tax-free – and there’s no National Insurance or complicated paperwork involved.

In fact, ordering gifts for employees that fit HMRC’s specifications, such as the One4all Gift Card – which can be spent in more than 55,000 stores nationwide – can be done online at the click of a button, and they don’t have to be declared.

But as it stands, the vast majority of employers in the UK are unaware of this – according to a One4allRewards.co.uk survey of UK business leaders, just 22% currently know about this.

This is a lost opportunity, as giving out gifts to employees can positively impact businesses, including their bottom lines, in a number of ways.

Here, Alan Smith, UK managing director at One4allRewards.co.uk, which sells One4all, the UK’s leading multi-retailer gift card, explains 6 reasons why businesses should be making use of this to give employees an annual Christmas gift:

Giving staff a token gift can make them more productive – It’s fair to assume that rewarding staff with a gift would have some small impact on productivity. But the extent to which this is true is surprising – our research suggests that receiving a gift from their employer is enough to make 91% work harder.

The timing couldn’t be better – Savvy employers time giving employees a token of appreciation to coincide with Christmas, to ensure workers understand how valued they are and feel good about work, ahead of the new year rush to change jobs.

Our research shows January is very much still a danger zone for employers, as workers report being more likely to look for a new job in January than any other time of year.

Plus, it’s Christmas!

Giving employees gifts can help you retain staff – According to a survey we recently carried out of 1,096 UK workers, almost half (46%) of the workforce would be less likely to look for a new job if they had recently received a bonus from their boss. And while HMRC stipulates tax-free gifts for employees cannot be given as a reward or be linked to their performance, a gift given ‘just because’ is likely to have the same effect.  

This in itself can be financially beneficial, as the costs for hiring staff, particularly when recruiters are involved, as well as paying for departing staff’s unused annual leave and the business time lost to searching for and interviewing candidates, can seriously stack up.

Weighed up against the cost of an annual tax-free gift of £50 or less – which can prevent staff leaving in the first place – it is a bit of a no brainer.

It is cheaper than giving bonuses – Simply put, unlike bonuses paid through an employees salary, you won’t pay any tax or National Insurance on employee benefits or gifts if they meet HMRC’s simple criteria for trivial benefits – and you could make savings of up to £48.10 per employee as a result!

Which makes it cheaper than giving a bonus.

Our data shows 53% of those business leaders at SMEs who do not give out bonuses say this is due to the costs involved – suggesting this could make a huge difference to companies all over the country, allowing them to give trivial benefits or gifts, and reap the rewards of doing so, for less.

It’s not as complicated as you might think – HRMC have made this surprisingly simple. To qualify, the employee benefit or gift should not be worth more than £50 per employee, and it shouldn’t be cash or a payroll payment, included in employee contracts, or given as a reward for work or performance. Provided gifts for employees meet this criteria, HRMC say they don’t need to be declared, so there’s also no complicated tax reporting involved – meaning no headaches at the end of the financial year.

Our data shows 53% of those business leaders at SMEs who do not give out bonuses say this is due to the costs involved – suggesting this could make a huge difference to companies all over the country, allowing them to give trivial benefits or gifts, and reap the rewards of doing so, for less.

It’s not as complicated as you might think – HRMC have made this surprisingly simple. To qualify, the employee benefit or gift should not be worth more than £50 per employee, and it shouldn’t be cash or a payroll payment, included in employee contracts, or given as a reward for work or performance. Provided gifts for employees meet this criteria, HRMC say they don’t need to be declared, so there’s also no complicated tax reporting involved – meaning no headaches at the end of the financial year

Despite popular belief, this tax exemption can be used to give a certain type of monetary gift – Gift cards are a perfectly legitimate trivial benefit which fit HMRC’s criteria and, if you choose a multi-store gift card, employees will have almost as much choice of how and what to spend it on as if they’d received a cash bonus.

The One4all Gift Card is the UK’s leading multi-store gift card. It can be loaded with anything from £10-400 and can be spent in more than 55,000 stores nationwide, including Marks & Spencer, John Lewis, Argos, Boots, B&Q, Curry’s, H&M and WH Smith.

There’s no getting around the fact that bonuses are an optional additional business expense which, in a small or medium sized workforce, can run up. 

But as we’ve seen – whether it’s through increasing employee productivity (which can increase businesses’ results) or saving on recruitment costs through safeguarding against staff departures – there is an alternative option which can have a very similar effect and in many ways can indirectly pay for itself.

When considering what to give, it’s worth bearing in mind that our research found monetary-based rewards, such as cash and gift cards, can have the longest-lasting impact on workers’ happiness levels.

For more information on this tax exemption, and to buy £50 One4all Gift Cards for staff tax-free, please visit https://www.one4allrewards.co.uk/taxfree

Alan Smith is the UK managing director of One4allRewards.co.uk. 

Author: Editor

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