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Employee morale opportunities which are also tax deductible for the employer

Employee morale after a holiday season is over is usually low, when your now cash strapped employees return to work with New Year resolutions of asking for a pay rise or worse – ideas of looking for another better paid job!  This employee morale focussed tax planning blog explores ways to provide meaningful employee morale boosting rewards that do not result in extra tax liabilities and are fully tax deductible for your company.

Here are some suggestions of tax-friendly methods which equally show appreciation to your team boosting their employee morale –

Idea 1 – £50 gifts – You can give your employees gifts or vouchers up to this amount without their incurring additional tax. Vouchers are convenient and can include those accepted by major online retailers such as Amazon or for food delivery services to treat your team.  For non directors there is no annual limit to how much or how many times these are given provided the reason is not performance related, open to all and each time no more than £50.

Idea 2 – Equip their home office – This is a valuable option as you can help create a conducive work environment leading to improved performance and employee morale. Your company will own the equipment, and if they leave, you can reclaim it or sell it to them.   Flexible hybrid home working options are now becoming a major factor employees consider when accepting an employment position.

Idea 3 – Provide a mobile phone – Initially, the cost of a phone can be high. This is crucial for employees who have client interactions to separate work and personal life, or for the marketing team to capture high-quality images. Additionally, the monthly contract can be managed through the business without incurring a benefit in kind charge.  By covering the cost through the company, you can recover the full expense and VAT. If the employee is expensing the cost, they can only claim for personal use.

Idea 4 – Reimburse home office expenses – Employees can claim certain costs for working from home. If an employee requires a specific broadband service for work, your company can contribute to the business portion. The employee’s work/personal split is 50:50, allowing them to claim 50% through a monthly expense report. In certain cases, flat rate expense claims may be available at £312 per year.

Idea 5 – Branded merchandise – Select an item and add your company’s logo. As long as it’s reasonable and aligns with business needs, it’s tax deductible. T-shirts and sweatshirts are a popular choices.

Idea 6 – Did you forego an office Christmas party?  Fear not the tax and national insurance free £150 per employee can be used for any annual event whether this is a late January party, summer event or 2024’s Christmas party – something for everyone to look forward to – boosting employee morale!  One other requirement to receive this allowance is that the party must be open to all employees.  For those of you with a business operating at multiple sites, HMRC says “If your business has more than one location, an annual event that’s open to all of your staff based at one location still counts as exempt provided it is open to all employees and/or separate parties are held for other locations or departments.

The £150 rule applies to both virtual and in person events.

You may wonder, why should I do this? Well your employees will perceive it as a thoughtful gesture. The VAT is recoverable on direct business purchases and you may also potentially receive up to 25% Corporation Tax relief.   Furthermore, branded merchandise offers great exposure for your company.  So a win/win for employee morale and your business!

These tax planning strategies not only promote a positive work environment but also address tax considerations.  For personalized advice tailored to your business, contact us today and make this a rewarding experience for both your staff and your business.