Employment Tax

Incentives, awards and prizes

Produced by Tolley
  • 19 Apr 2022 08:21

The following Employment Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Incentives, awards and prizes
  • Introduction ― incentives, awards and prizes
  • Cash
  • Vouchers exchangeable for cash
  • Non-cash awards
  • Trivial amounts
  • PAYE Settlement Agreements (PSAs)
  • Awards to employees of third parties

Incentives, awards and prizes

Introduction ― incentives, awards and prizes

Employers may use a variety of methods to reward and encourage employees in their work. These are commonly known as incentives, awards or prizes. For the purposes of this note, the term ‘award’ will be used to cover all circumstances. The tax treatment will depend on the type of award and how it is provided; there is no specific legislative provision for awards. This note therefore guides you to the treatment and where to see further detail about the treatment depending on the type and method of provision. The PAYE treatment of particular types of employment income that are not cash is covered in ITEPA 2003, ss 693–702 (Pt 11, Ch 4). This includes cash vouchers, non-cash vouchers, credit-tokens, readily convertible assets, shares and securities. There is more general guidance on benefits and other non-cash earnings in the Non-cash earnings ― overview guidance note.

Prizes in employer-run competitions attract PAYE and reporting consequences in the same way as any earnings or benefits would.

Employee-run competitions where

Access this article and thousands of others like it
free for 7 days with a trial of TolleyGuidance.

There's no margin for error. Think Tax.
Think Tolley.

TolleyGuidance gives you direct access to critical, comprehensive and up-to-date tax information and expertise you can rely on.


Popular Articles

Structures and buildings allowance

What is structures and buildings allowance (SBA)?From 29 October 2018, expenditure on constructing a non-residential building or structure, or in certain cases, expenditure on acquiring such a building or structure, qualifies for an SBA. The following note has been updated for the changes announced

01 Jul 2022 09:31 | Produced by Tolley Read more Read more

Chargeable transfers

This guidance note provides an overview of the basic principles of inheritance tax, when it is charged and how it is calculated. It contains links and references to other parts of the module where more details can be found.Transfers of valueInheritance tax is based on the concept of a transfer of

23 Mar 2022 10:58 | Produced by Tolley Read more Read more

Corporate interest restriction ― overview

The corporate interest restriction (CIR) essentially limits the amount of interest expense a company can deduct from its taxable profits if the interest expense is over £2 million. The actual mechanics of the CIR calculation are highly complex (the legislation is over 150 pages long) and are

23 Mar 2022 10:32 | Produced by Tolley Read more Read more