On 17 November 2022, the Court of Justice of the European Union ruled on corporate welfare in the case of a UK company that offered vouchers to its employees as part of a programme to reward the most deserving and efficient staff.
According to the European Court of Justice, such provision does not fall within the scope of Article 26 paragraph 1(b) VAT Directive, and those vouchers are not subject to VAT.
The government proposed a package aims to overcome the economic crisis brought about by the pandemic, including beefing up support for companies actively raising employee wages.
It is working on plans to raise the maximum tax deduction rate to 40 per cent for small businesses and 30% for large corporates that increase employee wages.