As an employer providing long-service awards to your employees, you have certain tax, National Insurance and reporting obligations. What’s included What you have to report and pay depends on: if the award is cash, non-cash or ‘readily-convertible assets’ , eg shares how much the award is for how long the employee has worked for you if you’ve given them a long-service award before

You don’t have to report or pay on a non-cash award to an employee if all of the following apply: they’ve worked for you for at least 20 years the award is worth less than £50 per year of service you haven’t given them a long-service award in the last 10 years For example, you can give a non-cash award with a value of up to £1,000 for 20 years’ service. Salary sacrifice arrangements You do have to report long-service awards if they are a part of a salary sacrifice arrangement.

What to report and pay

If any of the long-service awards you provide aren’t exempt , you must report the costs to HM Revenue and Customs ( HMRC ) and deduct and pay tax and National Insurance on them. Cash awards Any cash you award to an employee counts as part of their earnings. You must: add this amount to your employee’s other earnings deduct and pay Class 1 National Insurance and PAYE tax through payroll Non-cash awards For employees with at least 20 years’ service and no previous award in the last 10 years, you must: report the amount on form P11D pay Class 1A National Insurance on the value of the award over £50 per year of service For all other employees you must: report the amount on form P11D pay Class 1A National Insurance on the full value of the award Readily-convertible assets If you award a readily-convertible asset to an employee with at least 20 years service and no previous award in the last 10 years: add any value above £50 per year of service to your employee’s earnings deduct and pay Class 1 National Insurance and PAYE tax through payroll For all other employees: add the total value to your employee’s earnings deduct and pay Class 1 National Insurance and PAYE tax through payroll Salary sacrifice arrangements If the cost of the long-service awards is less than the amount of salary given up, report the salary amount instead. These rules don’t apply to arrangements made before 6 April 2017 - check when the rules will change .

The following guides contain more detailed information: Employment income: long service testimonial awards Class 1 National Insurance: earnings of employees and office holders: long-service awards

Expenses and benefits: long-service awards

Overview

As an employer providing long-service awards to your employees, you have certain tax, National Insurance and reporting obligations.

What’s included

What you have to report and pay depends on:

if the award is cash, non-cash or ‘readily-convertible assets’, eg shares
how much the award is for
how long the employee has worked for you
if you’ve given them a long-service award before

View a printable version of the whole guide

Expenses and benefits: long-service awards

Overview

What’s included

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Expenses and benefits: long-service awards

Overview

What’s included

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