New announcement. Learn more

CHARTERED ACCOUNTANTS (ICAEW)

News and advice to help make your property business a success

Landlords TaxProperty TaxLandlords Tax ReturnsProperty Tax ReturnProperty AccountsLandlords AccountsTax ReturnsChartered AccountantsOnline AccountantOnline BookkeepingOnline Tax ReturnsYour Online AccountantYour Online BookkeeperBusinessadviceAccountingTaxCashflowProperty AccountantSmallbusinessBusinesstipsTaxplanningVATCgtFurnished Holiday LettingsInheritance TaxLandlords AccountantPropertyProperty bookkeeperTaxreturnAnnual Exempt AmountBusiness RateCapital AllowancesCapital gains tax propertyComplianceDeductibleexpensesDisincorporationEmployment AllowanceFinanceFinancialmanagementHoliday Lets TaxLandlords FinancialMaking Tax DigitalMakingTaxDigitalMileage AllowanceMobilephonesOverlapreliefPensionPprProperty Company TaxProperty Tax Deductible ExpensesPropertyallowanceRent a Room ReliefSDLTSmall BusinessTimetoPayVAT invoice60 day capital gains limitAbolitionclass2AccrualsbasisAcquisitionsAdvisoryfuelratesAIAirBnBAllowable Business ExpensesAlphabet sharesAmapAnnual Tax on Enveloped DwellingsAppealArtificial intelligenceAssessmentAsset disposalAssociated CompanyAssociated Company Tax RulesAutumnstatementBad DebtBad Debt Tax ReliefBaddebtsBadgesoftradeBeancounterBenefits in KindBreakeven PointBudgetBusiness adviceBusiness asset defermentBusiness coachBusiness ContinuityBusiness EntertainmentBusiness ExpensesBusiness Rates ReliefBusiness tipsBusinessgrowthBusinesstypesBuy or Lease EquipmentBuytoletCapital Allowances for CarsCapitalallowancesCapitalexpenditureCar Capital AllowancesCarry Back LossesCashbasisChange of Tax BasisChatGPTCIS SchemeCommon TenantCompanies ExpenditureCompanies HouseCompany Account DeadlinesCompany Account FilingCompany Strike OffCompany Tax Efficient PropertyCompanyassociationCompanyloanstaxfreeCompulsory Strike OffConstruction Industry SchemeContacthmrcContentmarketingCorporation Tax LossesCorporation Tax New RegimeCorporation Tax RatesCorporationTaxCostsCryptocurrencyCustomerlistimplicationsDeductible Business ExpensesDepreciationDevelopmentDirectorsDirectors LoansDirectorsloansDisallowable Business ExpensesDiscoveryDividend allowanceDividend Allowance ReductionDividend PlanningDividendallowanceDividendsDLADomestic Items Tax ReliefDormantcompanyEmployee DiscountEmployee managementEmployeecompensationpaymentsEmployeeOwnershipTrustEndoflifeplanningEnquiryEnterpriseResourcePlanningEntrepreneurmindsetEquityExpensesExpenses Allowed For TaxExtrabenefitEyetestsFHLsFlippingFurnished Holiday Lets TaxGift AidGiftsGrowthhacksHelp to pay tax billsHICBCHMO Licensing FeesHMRC complaintsHoldoverreliefHoliday Lettings TaxHow to apply for a Business LoanHow to Extract ProfitHumourHybridIhtexemptionsIllegaldividendsInfluencersInheritance Tax Nil Rate BandInterestreliefInterestrestrictionInvestment Property TaxJoint TenantKeypersoninsuranceLandlord RepairsLandlords Self AssessmentLate vat registrationLBTTLeadgenerationLeadmagnetLeanbusinessmodelLetting Agent DisbursementsLetting Agent RecharresLettings ReliefLimitedcompanyLoaninterestLong Lets TaxLongserviceLTTMainresidencereliefManaged LetsManagement accountingMaritalhomedivorceMarriage allowanceMarriageallowanceMileage paymentMinimumwageMixedusesdltMortgage costsMortgage Interest ReliefNew propertyNewcompanycarfuelratesNewnicrulesNIC 2023 to 2024NIC savingsNicdisregardNicreductionNMWNmwerrorsNon-taxableNudgeletterOptiontotaxvatOverpayment ReliefPaperformPartnershipPartnershipbusinessesParttimePatternofoccupancyPAYEPAYE by Direct DebitPayrollingPenaltypointsPension Payments Tax ReliefPensioncontributionsPensionsPerformance-reviewsPeriodofgracePeriodsofabsencePersonal financePersonalallowancePersonalguaranteesPostcessationreliefPretradingexpensesProfitProfit-and-lossProfitAndLossProperty AllowanceProperty Development CompanyProperty IncorporationProperty Investment CompanyProperty investor accountsProperty investor tax tipsProperty LettingProperty Rental BusinessProperty TradingPropertycompanyRecharges by Estate AgentsRegularpaymentsReimbursedexpensesRent your driveRentalRentaroomResearch & DevolopmentResidence ReliefResidential property gainsResidentialsdltRetail stock controlRetainedprofitsRevenueRoom for rent taxRtiSASalarySDLT changesSection 455 TaxSection455taxSelective Licences LandlordsSelf AssessmentSelf-employednicSelfemployedSeperationServicechargesSettlementslegislationSimplified ExpensesSmallbizSmallbusinessratereliefSoftwareSpring BudgetStaffpartiesStamp dutySuccessJourneyTax Allowance on DrivewaysTax AllowancesTax DeadlinesTax Filing DeadlinesTax Free ChildcareTax free incomeTax on Company VansTax positionTax ReliefTax tips for landlordsTaxbillpaymentsTaxconsequencesTaxincentivesTaxpositionTaxpositionassetsTaxreliefTaxreliefsTaxsesTerminationpaymentsTipsTrade professionalTransfer AssetsTransfer Assets Between SpousesUmbrellacompanyUndisclosedincomeUnpaid RentVAT Bad Debt ReliefVAT DeadlinesVAT DisbursementsVAT PenaltiesVAT registrationVatpenaltiesVatregisteredVatregistrationthresholdWellbeing
TAGS

Long-service awards - How to reward your staff tax-efficiently

Long-service awards - How to reward your staff tax-efficiently


Rewarding your valued employees is a great way to keep them happy, engaged and motivated.

When a member of staff clocks up an employment milestone, you want to show your appreciation for all their hard work. Giving them extra benefits or rewards helps them feel valued and one of the tax-free benefits that’s often overlooked is long-service awards.

What is a long-service award?

A long-service award could be a cash sum, a non-financial reward or even share options in the company. But only non-cash awards can be given tax-free. If you give a cash amount or share options, you’ll have to report this to HMRC and the employee will be charged tax and National Insurance (NI) on the reward.

How do I give a tax-free long-service award?

Provided some simple rules are followed, awards to employees for long service can be made without any adverse personal tax consequences.

  • The gift must not be cash, or anything which can be easily exchanged for cash such as shares or precious metals.

  • The employee must have been employed for at least twenty years.

  • The employee must not have received a similar award from the same employer in the previous 10 years.

If the above apply, then an award with a value not exceeding £50 per year of service can be made without the need to deduct tax or national insurance contributions.

Where your employee has received an award in the previous ten years, regardless of the tax treatment of that previous award, subsequent ones are fully taxable and subject to National Insurance Contributions (NICs).

How does this work in practice?

Let’s look at an example and see how you would make a long-service award.

For a 20-year award:

  • The maximum tax-free value is £1,000 and will be tax-free provided no long service award was given in the previous 10 years.

  • A subsequent 25-year award would be taxable in full, as the previous one was given within 10 years.

  • A third award at 30 years would also be taxable in full, as its within 10 years of the 25-year award, even though that award was fully taxed. However, if there was no 25-year award – i.e. a break of 10 years had passed since the previous one – then a 30-year award would be tax-free up to a value of £1,500.

What happens if I give a cash award?

If you give a cash award to your employee, the full value must always be included in payrolled earnings and subject to PAYE and NI as normal.

Where a non-cash award exceeds the tax-free amount, it can be reported on a P11D form as a taxable benefit-in-kind, or the tax due can be included in a PAYE settlement agreement.

Talk to us about giving long-service awards

If you wish to recognise long service, you need to be aware of the associated tax rules.

We’ll help you draw up the rules for any long-service award scheme and keep you informed of any future changes.

Get in touch. We are here to help.