Tax tip: Tax free rewards for employees

Staff remuneration should be looked at closely by all businesses. There are many ways to reward staff with no tax implications for the employee but with a tax deduction for the employer. For example there is a £150 limit per member of staff where the employer spends the money on an annual event – or a series of events that do not exceed the limit in a 12-month period.

Mileage allowance

Staff can be paid a mileage allowance for using their own car on business journeys. The rate for up to 10 000 miles is 45p. This is tax deductible for the employer with no tax or National Insurance contributions for the employee. Paying qualifying amounts into a pension for staff gives a tax deduction against profits for the business and no tax or National Insurance for the employee.

There are conditions to meet for all ‘reliefs’ to...