Are gift cards subject to UK tax

Can you use vouchers as tax free rewards for employees in the UK?

My brother has now worked for several big banks, giving him coupons for bonuses (or I think they called them prizes) for achieving goals.

However, I can't find any of this to be legal and I can't believe that multinational banks would do anything that wasn't 100% legal!

I'm pretty sure the coupons couldn't be exchanged for cash (I think they were sold to someone) as they were intended for Love2Shop but could be used in many UK stores.

Which tax loophole do you use for this?

pjc50

"I cannot believe that multinational banks would do anything that is not 100% legal!" - Conversely: Multinational banks have entire departments that try everything that is not 100% illegal in order to avoid taxes.

Vicky

These types of prices ("incentive bonus programs") are tax-free for employees under certain conditions.

You can find the HMRC website here: http://www.hmrc.gov.uk/manuals/eimanual/EIM11200.htm

Follow the first link to the page "EIM11205 - Incentive Reward Programs: Tax Liability on Incentive Rewards". The idea is that the employer pays the tax on the award by concluding a PSA (PAYE Settlement Agreement) so that no tax is due from the employee.

GazB

That's a much better explanation. Many Thanks

Ian

You save on both employer and employee NI payments as the NI (UK 2nd system of income tax) rules for income tax are not the same.