Personal Finance & Money Asked by GazB on February 21, 2021
My brother has now worked for several large banks that have given him vouchers for bonuses (or I believe they called them prizes) for reaching targets.
Yet I can find nothing about this being legal and can’t believe that multinational banks would do anything that wasn’t 100% legal!
I am fairly sure the vouchers couldn’t be exchange for cash (bar selling them to someone I guess) as they where for Love2Shop but could be used in a lot of UK stores.
So what tax loophole are they using for this?
These kind of prizes ("Incentive award schemes") are tax-free to the employee subject to certain conditions.
HMRC's pages about it are here: http://www.hmrc.gov.uk/manuals/eimanual/EIM11200.htm
Follow the first link to the page called "EIM11205 - Incentive award schemes: tax liability on incentive awards". The idea is that the employer pays the tax on the award by entering into a PSA (PAYE Settlement Agreement) so that there is no tax due from the employee.
Correct answer by Vicky on February 21, 2021
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