Money Moral Dilemma: Should my employer adjust its rewards scheme so I don't lose out?

MSE_Sarah

This week's MoneySaver who wants advice asks…

My employer has a recognition scheme for colleagues who go above and beyond, with prizes paid in vouchers that are processed through payroll for tax purposes. However, anyone repaying a student loan can actually lose money by winning because the prize can push their income over repayment threshold. That's going to happen to me next month, so I'll end up taking home less and effectively pay to receive a 'reward'. Higher-rate taxpayers get adjusted payroll so they don’t lose out, so should the company make changes so no one is penalised for being recognised? Or should we just be grateful it offers such a scheme in the first place? 

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Woodstok2000

You're not losing out, you'll be paid slightly less as the loan repayment comes out, but the voucher value will make up for that. If you don't see value in the vouchers the you can always opt out of the scheme.

Hard to see how payroll could be adjusted for higher rate taxpayers, but you could ask your employer for the same approach. I imagine they'd be reluctant to start applying potentially complex solutions to individual tax issues though.

elsien

It doesn’t matter what anyone thinks “should” happen because it’s not something you have any control over. mots down to your employer.
Unless there are enough of you affected to ask the question collectively.
It isn’t a money moral dilemma at all, it’s more an employment perks question.

You do of course also have the option of declining the monetary rewards and just accepting the recognition.

Jodo

This is a bit of a niche question isn’t it? How often are you likely to receive these rewards? If it’s anything like where I work, very infrequently! Our system does give you the full value though, it’s not treated as taxable income. In answer to your question, you need to decide whether by accepting the award you really will be worse off that month, or whether you are simply not going to receive quite as much as someone who is not having to repay a student loan. If you really will be worse off, just don’t accept the monetary award. Simple. Also, as it’s a company scheme, there is very little you can do as an individual to change it.

keithyno.1

You ask, "should the company make changes so no one is penalised for being recognised?" Well that's impossible for any of us to answer without knowing anything at all about the company or its pay structures.

In your particular case you say you'll end up taking home less and effectively pay to receive a 'reward.' Well if that's the case, why don't you just decline it and/or ask the company not to make it?

M4rkOne97One

You may make a student loan repayment in one month because of the the incentive award , but if your total annual income is below the student loan threshold, you can claim a refund at the year end, can't you?

https://www.gov.uk/repaying-your-student-loan/getting-a-refund

Woodstok2000

https://forums.moneysavingexpert.com/discussion/comment/81889000#Comment_81889000

This sounds dodgy - workplace incentive awards are almost always taxable...

Kaffiness

If the reward tips you over the annual threshold to payback the student loan, and you cant afford to do that, then I would say thank you for the recognition and politely decline the monertary reward. You could explain the situation and ask if it would be possible to have time off instead - be that an early mark one Friday or an extra day’s leave for your birthday.

Jodo

https://forums.moneysavingexpert.com/discussion/comment/81889166#Comment_81889166

I can assure you that where I work the reward and recognition scheme gives vouchers which are not subject to tax. We do not receive cash awards.

Namelesselder

You have two options really; forgo the vouchers or ask the company if it's able to adjust the scheme to take your issue into account. You may not be the only - or the last - person to have this problem. It cannot do any harm to ask.

Woodstok2000

https://forums.moneysavingexpert.com/discussion/comment/81889179#Comment_81889179

I am almost certain you're wrong - your employer may pay the tax for you, but almost all incentives, including vouchers, are taxable.

https://www.gov.uk/guidance/employee-incentive-awards

If your employer has found a loophole it would be interesting to know what it is!