Prepaid credit cards for employee recognition bonuses

[Timja]

My company is looking at getting prepaid credit cards which can be used when awarding small bonuses to staff e.g. company has given £100 Tesco voucher at Christmas or £50 voucher for meeting a production target or safety milestone.

Rather than having to specify a shop it needs to be used at and to avoid having to issue and distribute multiple cards we are keener on a card employees can keep and use at any shop plus it will be easier to credit for future awards.

Can anyone recommend a company they have used for this?


Thanks

[randlemarcus]

The last couple of places I have worked at seem to gravitate towards Love to Shop vouchers for this sort of thing. Either L2S have really good marketing teams, or there's something in https://www.gov.uk/guidance/employee-incentive-awa... that means that prepaid cards come with a big pile of complexity, and HMRC view them the same way as a handful of tenners. Just be aware

[jeremyc]

I received a refund/compensation from BT on a Purecard which, as a consumer, all worked very well.

I have no experience of being a business buying/issuing them however.

[AndyAudi]

No idea how many you’re talking about but I’m just going to mention this.

A “non cash gift” of £50 or less is not taxable/reportable

More than that or a “performance reward” of any sort & it is. So any voucher/card size for “meeting a target” etc is not a gift & will attract Tax/NI so mind your wording.

Many organisations operate a PAYE settlement agreement to pay The Tax & NI on such benefits.

In your example

Giving a £50 voucher for Christmas gift to all employees costs organisations £50 the end

Giving the same £50 voucher as a reward for something will cost organisation either £64 or £83 depending on recipient being 20 or 40% tax payer.

I get what you’re saying about “re-loadable” card, they would be handy, but if it’s fairly few for rewards I would just give them the cash in their pay (increased a little to mitigate deductions). One of the issues with some prepaid credit cards is that if you can withdraw cash with them the are no longer treated as “non cash” & are taxable.

[Timja]

Thanks for the replies. Set up fees are quite large for prepaid cards so if only using 2 or 3 times a year it hardly seems worth setting up as they end up being quite a large percentage of what is actually being loaded onto each card. (c. £2k set up, £5 per card and 5% load fee each time!)

Good to know about £50 limit as I imagine most will fall under this. I'm awaiting feedback from accounts as to their views before spending too much other time.

[MitchT]

randlemarcus said:

The last couple of places I have worked at seem to gravitate towards Love to Shop vouchers for this sort of thing.

Place where i work does it. They can be a bit of a pain though. They're quite limited in where you can spend them. You can convert them to e-vouchers for a wider range of stores but these are usually in fixed denominations which adds more pain. For example...

I had a £40 L2S voucher.
I wanted to use it at John Lewis.
John Lewis don't accept L2S but I can use L2S to buy John Lewis e-vouchers.
However, John Lewis e-vouchers are only available in multiples of £25.
So, a £40 L2S voucher will only get me a £25 John Lewis e-voucher.
I'm now stuck with a L2S voucher with £15 of credit that I still have to find a home for.

When I took out my current service with BT they gave me a prepaid Mastercard loaded with £120 of credit which I could spend anywhere. This seems like a much better way of doing things though I appreciate the comments about set-up costs.