How to use Vouchers for Tax Savings

If you’re looking for a low admin benefit to be given to your employees, vouchers may be the answer. The range of goods and services you can provide this way is huge, making them more appealing to your employees.

Voucher schemes can be easy to run compared to other benefits. There’s not much administration work involved there. All you need to do is buy them from supermarkets, shops and hand them out to employees.

Vouchers from local shops, restaurants etc. can be more cost effective. You can often negotiate a discount, typically between 5% and 10% of the face value. This means that following will apply.

  • A voucher worth, say, £100 might cost you only £90
  • The employee can spend the face value but only be taxed on the cost to you.

For employees earning less than £817 they per weekly NI at 12%, giving them a benefit, on which they’ll pay no NI, means they are better off. This is called a salary sacrifice arrangement

However, there the anti-avoidance rules act in a way to avoid any tax loopholes because vouchers which can be converted into cash or exchanged for goods which can easily be turned into cash. If you want to offer a wider choice of where your employees can spend their money, or you don’t want to get involved in talking to local shops etc., there is an abundance of companies providing voucher schemes.

If you need any advice on any tax, contact KVS Accountants for a free no obligation meeting. KVS provides accounting and tax services for businesses in Barnes, Barnes Common, Wandsworth, Battersea, Earls Court, West Kensington and Hammersmith

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