Bloom / Apron to get rewards when paying payroll?

cgfw201

A mate of mine started using Bloom for his payroll. They give 2 Avios for every £1 spent on Payroll via them. He's got 20 staff or so, and spends £60k/ month on payroll, so 120,000 Avios per month for him. Which is rather nice, 1.4m per year is circa £14,000 to spend on flights for his family.

Tried to sign up with Bloom, but our Payroll is only around £15k/month currently and it's minimum £30k to sign up.

Seen Apron do a similar service, but with much higher fees.

Any others that any other SMEs use that I should be looking at?

flaneurs_lobster

What's the tax/legal position of these kinds of rewards? Wouldn't the Avios actually belong to the business?

Would they not have to go through the books like any other earnings/income?

Woodstok2000

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In addition to tax/legal concerns, I would also be worried about paying a company for payroll services when they themselves outsource the entire payment ecosystem to a 3rd party:

Woodstok2000

Did a bit of digging and I would be very careful with this kind of scheme.

HMRC sets out some conditions in its Employment Income Manual:

1. The loyalty account must belong to the individual and not the employer. In other words, the Boots card, Nectar account or air miles account must be registered to you, not your company.

HMRC’s own wording (EIM21618) states:

Provided the vouchers, air miles or points belong to the employee rather than the employer, they are not considered as being provided by reason of their employment even if the goods or services giving rise to them happen to be purchased as part of the employee’s business travel or using a credit card provided by the employer.

1. The rewards must not be linked to employment conditions. For example, if a company purchased a pool of air miles and handed them out to staff as part of an incentive scheme, those rewards would count as a benefit in kind.
2. The loyalty programme must be open to the public. If anyone booking the same flight or buying the same goods would earn the same points, the scheme is valid. If the benefit is only available because of your employment status, it becomes taxable.

While the schemes in question do seem to provide the benefits to personal accounts, that seems to be against the spirit of the rules, which is a key consideration.

If HMRC decided this was a benefit in kind, the company will be liable to 15% Class 1A NI, and the employee is going to be liable to BIK at their marginal rate.

120,000 avios per month at a nominal value of £60k is a potential tax liability of £9k per month for the company, and a minimum of £12k per month for the employee.

I'm not a tax expert, so all the above is just my opinion, but I would want very secure expert advice before taking that type of potential liability on.

Grumpy_chap

120,000 avios per month at a nominal value of £60k

I don't think the Avios have a value of £60k. £60k is the payroll amount.

Using the OP's own valuation

1.4m per year is circa £14,000

That would make the 120k Avios each month worth £1,200.

One has to ask what the fees are incurred by the company to include the £1.2k kick-back.