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HMRC internal manual

PAYE Manual

Employer records: set up employer record: payment card reward scheme

A Payment Card Reward Scheme is

  • A scheme set up by a payment card company, bank or building society to tax payments of cash made to an employee or third party retailer who passes this on to their employee as a reward for the recovery of a lost or stolen payment card or cheque guarantee card

Note: Rewards made to the public are not taxable.

From 6 August 1990 a modified system of PAYE has been available to be operated by those card companies that are members of the Association of Payment Clearing Services (APACS).

Where card companies taxed the rewards in the normal way through the company’s PAYE schemes this system was not used.

Modified System

Under the modified system the card company

  • Deducts tax at basic rate (no National Insurance Contribution is payable)
  • Is not required to complete forms P14, P45 or P46
  • Gives the recipient a statement / certificate of tax deducted
  • Makes payment to Banking Operations in the normal way
  • Submits a separate annual return showing total gross pay and total tax deducted