Motivating Staff Tax Efficiently

Posted on in Corporation Tax

How can I motivate my staff in a tax efficient way?

You can make one off, personal, unexpected small gifts as a gesture of goodwill, such as a wedding present, without a tax consequence.

If you agree that an employee can work from home regularly for, say, one day a week, you can pay £208 per year without any further calculations. If the employee's domestic bills reveal the cost is higher than this, this higher cost may be reimbursed tax free.

You could hold a party after your year end and/or in the summer, as you can spend a tax free total of up to £300 incl VAT per employee with guest each year. Make a small charge to the guests and all the VAT is recoverable as well.

For peace of mind for you and your staff, offer free private healthchecks, as these aren't taxable regardless of whether annual private health premiums are already paid and taxed.

A payment of up to £5,000 with reference to the financial benefit to your business, may be made tax free to an employee who makes a suggestion outside of his/her normal duties.

Pension contributions can be increased through lower company/employee national insurance costs if employees give up a bonus or some salary in advance.

For key staff, allow them to buy shares in your company at a later date at today's value, free of income tax or national insurance. The arrangement can include performance criteria so shares are only available if the company does well over a few years.

Your company gets corporation tax relief for all the above, as for normal salary.

Correct documentation is key to ensuring these amounts can be provided tax free.