TAX TIP OF THE WEEK - With the cost of living going up your employees may soon be hankering for a pay rise even if you think their performance doesn't deserve one. A 'Staff Suggestion Scheme' could be the answer.
Once this is implemented, it will incentivise your team to develop ideas to improve your business, and any reward payments you make a FREE of tax and NI.
You can pay up to £5k for a suggestion but there are some conditions and payment must be linked to the financial benefit for your business, which is the greater of:
– 50% of the expected benefit in the first year
– 10% of the expected benefit over the next 5 years
The financial benefit is just an estimate of what can be reasonably expected. As long as this is documented, it is unlikely to be challenged by HMRC.
I hope this was helpful, for lots more tax tips and strategies get a copy of our 71 ways to save tax checklist https://bit.ly/2YQbhvr