Expenses and benefits: long-service awards
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.