EIM11235 - Incentive award schemes: taxed award scheme arrangements

Taxed award schemes (TAS)

Direct employers and third parties providing incentive awards can enter into special accounting arrangements for non-cash awards. These arrangements are called taxed award schemes (TAS). They are made under the general power of the Board of Inland Revenue to administer the tax system. Under the arrangements, persons who make awards either to their own or other people’s employees, or both, can enter into a contract with the Inland Revenue to account directly for tax on the awards. The providers have the option of accounting for tax at either the basic rate or the higher rate on the grossed up value of the awards they make. The Incentive Award Unit (see EIM11240) handles all the negotiations.

Although employers can use the TAS arrangements to pay the tax on non-cash incentive awards they provide to their own employees, it is likely that in most cases they will prefer to enter instead into a PAYE settlement agreement (see EIM11270).

Unlike awards covered by PAYE settlement agreements (PSAs), non-cash awards and the tax paid on them under TAS arrangements remain assessable on the employee. So the employee has to enter the grossed-up value of the award and the tax paid on it on any tax return. But normally no further tax is due from an employee unless the provider has only entered into a basic rate TAS and the recipient of the award is liable at the higher rate.