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My client, a local employer, proposes to run an internal 'Christmas Savings Club' for its staff. The employees would make regular payments via a deduction from their salary each month and would receive a lump sum payment each November which comprised the total amount that they had paid in over the year, plus a small amount of interest. The savings club itself would make no profits; the monies would simply be deposited into a bank account and the capital and accumulated interest would then be distributed.
My client a local employer proposes to run an internal 'Christmas Savings Club' for its staff. The employees would make regular payments via a deduction from their salary each month and would receive a lump sum payment each November which comprised the total amount that they had paid in over the year plus a small amount of interest. The savings club itself would make no profits; the monies would simply be deposited into a bank account and the capital and accumulated interest would then be distributed.
Are there any tax implications to the company or individual savers? Should tax be deducted from the interest and if so by whom; the employer or the bank?
Query T17 135 – Clubber.
Reply by Tower:
The money which the employer collects will be held under an informal bare trust for the employees. It will...
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