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

What鈥檚 included

What you have to report and pay depends on:

• if the award is cash, non-cash or 鈥榬eadily-convertible assets鈥�, for example, shares
• how much the award is for
• how long the employee has worked for you
• if you鈥檝e given them a long-service award before

You do not have to report or pay on a non-cash award to an employee if all of the following apply:

• they鈥檝e worked for you for at least 20 years
• the award is worth less than 拢50 per year of service
• you have not 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 拢1,000 for 20 years鈥� service.

Salary sacrifice arrangements

You do have to report long-service awards if they are a part of a salary sacrifice arrangement.

If any of the long-service awards you provide are not 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鈥檚 other earnings
• deduct and pay Class 1 National Insurance and PAYE tax through payroll

Non-cash awards

For employees with at least 20 years鈥� 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 拢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 拢50 per year of service to your employee鈥檚 earnings
• deduct and pay Class 1 National Insurance and PAYE tax through payroll

For all other employees:

• add the total value to your employee鈥檚 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 do not apply to arrangements made before 6 April 2017 - check when the rules will change.

The following guides contain more detailed information: