Companies can use incentive award schemes to encourage their employees in various ways, for example, to sell more of their own goods and services. The award can take various forms including cash, vouchers or other gifts. Where an employer meets the tax payable on a non-cash incentive award given to a direct employee by entering into a PAYE settlement agreement (PSA), the award is not chargeable to tax on the employee. With the exception of non-cash awards covered by a PSA, incentive awards made to employees are chargeable as employment income. The value of these awards is calculated as follows: CashThe value to use is the total amount of cash awarded. VouchersIf the award consists of vouchers, then the value to use is the full cost to the provider of making the award. Other giftsIf the award is something other than vouchers, then the charge is usually the full cost to the provider of making the award. There are certain exceptions for the very low paid. HMRC also offer concessions on this tax treatment if employers want to reward employees using certain encouragement awards, suggestion schemes and to reward long service.