We have seen many different ways in which employers wish to reward their staff including payment of regular salary benefits, employee share schemes and pension contributions all of which are taxed through payroll P11D’s or the business’ PAYE Settlement Agreement (“PSA”), however, one employer has gone that step extra, gold bullion bars! It’s not cash, so no tax or NIC’s were paid on it. However, HMRC got wise to this and took the employer to court where it has been viewed by the General Anti-abuse Rule advisory panel that this has been purely to avoid associated tax payments and therefore ruled that rewarding employees with gold bullion bars is not an accepted method of remuneration.
The income tax and National Insurance charges which the employer tried to avoid through gold bullion bar remuneration would result in a substantial loss to HMRC and in turn will result in non-compliance by the business. In addition, there could also be a loss of corporation tax for HMRC. It is clear why HMRC cracked down on this.
It is important to note that any income given to an employee is subjected to PAYE under HMRC’s legislation, so whilst gold may seem a good choice, it is clear that if the purpose is to remunerate or reward, it will be classified as employment income.
If you would like any further information on how to effectively remunerate please do no hesitate to contact Charlotte Stewart (firstname.lastname@example.org) or your usual AAB contact.