Staff holiday - sales incrntive

BIK/ PSA

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Just taken on a new client who starting from this year wants to offer an overseas holiday to Dubai for his sales team if they hit their target.

 

When I told him about the tax implications for them/Ltd company his response was that his competitors who are much larger seem to do the same and the employees arent tax. If he told his team they would be taxed at either 40% / 45%, he thinks they would leave etc. I guess if you are funding nearly half the price of the holiday, it does seem less appealing and if it were me I would want the cash instead of spending even more time with my colleagues /boss on holiday! 

I guess I wonder if these competitors are using a PSA on the basis that it is only once a year but that makes it very expensive for the employer. Or they are just not declaring this as a benefit but I dont know how that could ever be achieved....

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By David Ex
14th Mar 2024 17:50
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By FactChecker
14th Mar 2024 19:40

Whoopsie ... although I'm more puzzled at how Aweb list OP as being posted today at 20:02 (quite a while afore your response - indeed ahead even of me right now)?

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By Tax Dragon
14th Mar 2024 19:54

They're in Dubai.

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By FactChecker
14th Mar 2024 21:56

Never occurred to me to 'sample' the benefit before giving my view on its potential tax treatment ... (sound of head gently beating against desk at thought of all those missed opportunities).

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By kim.shaw-and-co.com
14th Mar 2024 20:08

PSAs are not the only way employees can be provided with awards 'free of tax'. There is also the Taxed Award Scheme (TAS) route which is how things were done before PSAs came along.

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim11245

Benefit and tax are accountable by employees under Self Assessment (or taken into account in their coding as appropriate) but they get a credit for the tax their employer has paid.

Of course that is much more vulnerable to impacting other income they may have and also to the tax paid 'on account' by their employer not meeting (or exceeding) the full liability. Any difference would end up taxed on (or refunded to) the employee.

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