As the festive season approaches, business owners often seek ways to show appreciation to their hardworking staff. The question arises: "Is there a way to reward employees without subjecting them to additional tax burdens?" For this blog, we're shining the spotlight to employees and exploring avenues to provide meaningful rewards that don't add extra tax weight.

Here's a breakdown of tax-friendly ways to show appreciation to your employees:

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£50 gifts - You can provide your staff with gifts/vouchers up to this amount but don’t exceed it or the whole amount is taxable! Vouchers are easy and you can get ones that cover all the big online companies. Other good examples are Amazon or food delivery meals to get a nice treat tea etc.

Kit out their home office - This is a nice one as you can help provide a great working environment for you employees and the business owner benefits from their optimised performance.  Your company will own the equipment and if they ever leave, you can take it back or sell it on to them. 

Provide a mobile phone - For starters the initial outlay for a phone can be expensive. This is important if they have client contact to separate their work and personal life or for the marketing team to be able to take high quality snaps. Plus the monthly contract can go through the business and no benefit in kind is charged.

By putting the cost through the company you can recover the full cost and VAT. If the employee is expensing the cost they can only claim personal use.

The next one takes some working out but they can claim some costs from working from home. If your employee needs a certain broadband to work, your company can contribute to the business element. The employees work / personal split is 50:50 meaning they could put 50% through a monthly expense claim. Flat rate expense claims may also be available in certain circumstances at £312 per year.

Merchandise – Find an item and stick you companies’ logo on it! As long as it's reasonable and in line with business needs, it's tax deductible. Hoodies are a favourite at Gravitate Accounting.

You might be thinking, why should I do this? Your employees will see it as a nice gesture. The VAT is recoverable on purchases made directly through the business (where applicable - not on vouchers for example). You could also get Corporation Tax relief potentially up to 25%. Finally, branded merchandise is great exposure for your company.

These strategies not only foster a positive work environment but also alleviate tax concerns. For personalised advice tailored to your business, get in contact with us today and make this a rewarding experience for both your staff and your business.

For more financial strategies click here.