The UK Must Modernise Gifting Regulations to Support Its Workforce
View original article at Finance Derivative
With rising inflation and increasing financial pressures, the UK’s workforce is struggling to stay afloat. During this cost of living crisis, it is essential for businesses to offer the deserved financial support to employees, yet the UK’s outdated tax-free gifting cap of £50 remains a prime example of how the government is failing to meet the needs of its country. This limit pales in comparison to countries like Ireland, where the cap this month was increased to €1,500, and Italy, with a limit of €3,000.
Why Digital Gifting Is a Necessity in the Modern Workplace
Naturally with time the workplace has evolved, shifting expectations. Digital gifting has emerged as not just a convenient option, but a necessity for businesses looking to support their teams efficiently. With inflation pushing up the cost of everyday goods, employees need flexible rewards that help them navigate their financial challenges.
Research shows that businesses rated highly on employee engagement see 21% higher productivity, and flexible benefits like digital gift cards play a key role in that engagement. Traditional vouchers and gift cards come with a long list of limitations, making them increasingly difficult to use. They are often restricted to a number of retailers, preventing flexibility for employees to use them where they need. Additionally, many of these physical vouchers decrease in value over time due to expiration dates, inflation or charges for not being spent.
Unlike traditional methods, digital cards offer employees the freedom to spend on what they need most, whether that’s groceries, bills, or personal expenses. This flexibility is particularly important, as other research shows more than 62% of employees report that the benefits they currently receive don’t address their actual needs.
On top of that, physical vouchers come with logistical challenges. They need to be printed, distributed, and sometimes mailed, creating delays and the risk of being lost or damaged. Digital gift cards can be delivered instantly via email or SMS, removing the delays and logistical hurdles associated with physical gifting methods. This instant access is crucial for employees trying to manage tight budgets and rising living costs.
The UK Government Is Falling Behind
It is clear that the UK government is ignoring the benefits of corporate gifting, with their refusal to update the tax-free cap. The current limit of £50 is far behind other countries in Europe.
We saw Ireland recently increase its tax-free gifting limit to €1,500, along with increasing the frequency of gifting to 5 times a year, showcasing the necessary forward-thinking approach to supporting employees during difficult economic times. Due to the UK’s policies, businesses and employees are unhappy with their current situation. This is highlighted in a survey which states that only 28% of UK employees rate their employer’s financial support as “good” or “excellent.”
Time for Change
As long as the UK government maintains its outdated gifting policies, it continues to ignore the reality of today’s workforce. Digital gifting is not just more efficient, It’s necessary to meet employee expectations and support their well-being. Countries like Ireland and Italy have modernised their approach to employee rewards.
By raising the tax-free gifting limit and embracing the flexibility of digital solutions, the UK can take a crucial step toward supporting its workforce in a way that aligns with modern needs. The current cap of £50 is simply no longer fit for purpose – the UK needs to change.