New announcement. Learn more

CHARTERED ACCOUNTANTS (ICAEW)

News and advice to help make your property business a success

LANDLORDS FINANCIAL BLOG

All

Landlords Tax Property Tax Landlords Tax Returns Landlords Accounts Property Tax Return Property Accounts Tax Returns Landlords Financial Chartered Accountants Online Accountant Online Bookkeeping Online Tax Returns Your Online Accountant Your Online Bookkeeper Tax Businessadvice Accounting Cashflow Property Accountant Smallbusiness VAT Businesstips Expenses Inheritance Tax Property Taxplanning Capital Gains Tax Cgt Furnished Holiday Lettings Landlords Accountant PAYE Property bookkeeper SDLT Taxreturn Allowable Business Expenses Annual Exempt Amount Business Expenses Business Rate Capital Allowances Capital Gains Capital gains tax property Compliance Deductibleexpenses Disincorporation Dividends Employment Allowance Finance Financialmanagement Gifts HMRC Holiday Lets Tax Ihtexemptions Income Tax Investment Property Tax Making Tax Digital MakingTaxDigital Mileage Allowance Mobilephones NIC Overlaprelief Partnership Partnershipbusinesses Pension Ppr Property Company Tax Property Tax Deductible Expenses Propertyallowance Reimbursedexpenses Rent a Room Relief Small Business TimetoPay VAT invoice 60 day capital gains limit Abolitionclass2 Accrualsbasis Acquisitions Advisoryfuelrates AI AirBnB Alphabet shares Amap Annual Tax on Enveloped Dwellings Appeal Artificial intelligence Assessment Asset disposal Associated Company Associated Company Tax Rules Autumnstatement Bad Debt Bad Debt Tax Relief Baddebts Badgesoftrade Beancounter Benefits in Kind Breakeven Point Budget Business advice Business asset deferment Business coach Business Continuity Business Entertainment Business Rates Business Rates Relief Business tips Businessgrowth Businesstypes Buy or Lease Equipment Buytolet Capital Allowances for Cars Capital Gain Capitalallowances Capitalexpenditure Car Capital Allowances Carry Back Losses Cashbasis Change of Tax Basis ChatGPT Child Benefit CIS Scheme Common Tenant Companies Expenditure Companies House Company Account Deadlines Company Account Filing Company Strike Off Company Tax Efficient Property Companyassociation Companyloanstaxfree Compulsory Strike Off Construction Industry Scheme Contacthmrc Contentmarketing Contributions Corporation Tax Losses Corporation Tax New Regime Corporation Tax Rates CorporationTax Costs Cryptocurrency Customerlistimplications Deductible Business Expenses Deductions Demerger Depreciation Development Directors Directors Loans Directorsloans Disallowable Business Expenses Discovery Dividend allowance Dividend Allowance Reduction Dividend Planning Dividendallowance DLA Domestic Items Tax Relief Dormantcompany Employee Discount Employee management Employeecompensationpayments EmployeeOwnershipTrust Endoflifeplanning Enquiry EnterpriseResourcePlanning Entertainment Entrepreneurmindset Equity Expenses Allowed For Tax Extrabenefit Eyetests FHLs Flipping Furnished Holiday Lets Tax Gift Aid Gift Allowance Growthhacks Help to pay tax bills HICBC HMO Licensing Fees HMRC complaints Holdoverrelief Holiday Lettings Tax How to apply for a Business Loan How to Extract Profit Humour Hybrid Illegaldividends Income Inflationary Gains Influencers Inheritance Tax Nil Rate Band Interest Rates Interestrelief Interestrestriction ISA Joint Tenant Keypersoninsurance Landlord Repairs Landlords Self Assessment Late vat registration LBTT Leadgeneration Leadmagnet Leanbusinessmodel Letting Agent Disbursements Letting Agent Recharres Lettings Lettings Relief Limitedcompany Liquidation Demerger Loaninterest Long Lets Tax Longservice LTT Mainresidencerelief Managed Lets Management accounting Maritalhomedivorce Marriage allowance Marriageallowance Mileage payment Minimumwage Mixedusesdlt Mortgage costs Mortgage Interest Relief National Insurance New property Newcompanycarfuelrates Newnicrules NIC 2023 to 2024 NIC savings Nicdisregard Nicreduction NMW Nmwerrors Non Allowable Business Expenses Non-taxable Nudgeletter Optiontotaxvat Overpayment Relief Paperform Parttime Patternofoccupancy PAYE by Direct Debit Payrolling Penaltypoints Pension Payments Tax Relief Pensioncontributions Pensions Performance-reviews Periodofgrace Periodsofabsence Personal Expenses Personal finance Personalallowance Personalguarantees Postcessationrelief Pretradingexpenses Profit Profit-and-loss ProfitAndLoss Property Allowance Property Development Company Property Incorporation Property Investment Company Property investor accounts Property investor tax tips Property Letting Property Rental Business Property Trading Propertycompany Recharges by Estate Agents Regularpayments Relief Rent your drive Rental Rentaroom Research & Devolopment Residence Relief Residential property gains Residentialsdlt Retail stock control Retainedprofits Revenue Room for rent tax Rti SA Salary SDLT changes Section 455 Tax Section455tax Selective Licences Landlords Self Assessment Self-employednic Selfemployed Selling Online Seperation Servicecharges Settlementslegislation Simplified Expenses Smallbiz Smallbusinessraterelief Software Spring Budget Staffparties Stamp duty SuccessJourney Tax Allowance on Driveways Tax Allowances Tax Break Tax Codes Tax Deadlines Tax Deductions Tax Filing Deadlines Tax Free Childcare Tax free income Tax on Company Vans Tax position Tax Relief Tax tips for landlords Taxbillpayments Taxconsequences Taxincentives Taxposition Taxpositionassets Taxrelief Taxreliefs Taxses Terminationpayments Tips Trade professional Training Transfer Assets Transfer Assets Between Spouses Umbrellacompany Undisclosedincome Unpaid Rent VAT Bad Debt Relief VAT Deadlines VAT Disbursements VAT Penalties VAT registration VAT Reverse Charge Vatpenalties Vatregistered Vatregistrationthreshold Wellbeing Working from home

TAGS

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

August 2, 2023

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.

Longservice

businesstips

Landlords Tax

Landlords Accounts

Landlords Tax Returns

Property Tax

Property Tax Return

Property Accounts