2012 AwArd Thank you

Transcription

1 2012 Award Thank you

2 Thank you for your hard work and loyalty 2012 Award Dear Name I am pleased to be able to share with you details of your You may remember that in May 2012 we announced that in place of a Shares In Success award for the year, we were awarding you a of 3.6% of your earnings, which would be paid to you from This bonus was to reward your hard work during 2012 and to recognise your ongoing commitment and contribution over the last three years towards putting customers at the heart of everything we do. Your is calculated using the greater of earnings from either the 2011/12 or 2014/15 Financial year, whichever gives the biggest bonus for you. You have been awarded a of (award) which is 3.6% of your earnings in (year). The other good news is that you can choose to receive your on any pay day between now and June This means that you can receive your bonus at the right time for you. The earliest opportunity to receive your bonus is 5 June 2015 and if you want to receive it at that date you have until 23 April 2015 to let us know. If you choose to take your award between now and May 2017 you will receive your less Income Tax and National Insurance if liable. However, if you wait until June 2017 you may get more as Tesco will pay any Income Tax or National Insurance liable on your behalf, so the payment you receive will be your full award. Please read this booklet carefully as it explains more about your, what you need to consider regarding Income Tax and National Insurance implications and how to make your instruction. Thank you again for all your hard work over the past three years and the loyalty you have shown to Tesco. Dave Lewis Chief Executive Officer 2

3 What do I need to know? Now your is here it s important that you understand any Income Tax and National Insurance contribution (NIC) implications related to your so that you can decide the right time for you to receive it. Page 4 provides some examples of how Income Tax and NIC can affect the value of your bonus. You can take your at any point from now until June Once you know how Income Tax and NIC might affect your bonus it s up to you to decide when you d like that boost to your pay packet. This information pack will help you understand when to make your instruction so that you can receive your bonus at the right time for you. Page 5 explains the instruction cut off dates for receiving your payment. Page 7 shows a table explaining what happens if you leave Tesco. You can make your instruction to receive your using one of three simple methods online, text or by phone. Page 6 explains the methods for instruction. 3

4 Make the best choice for you If you choose to take your before June 2017 you may receive your bonus less Income Tax and/or National Insurance contributions (NIC). Your Income Tax depends on your pay over a year and your NIC depends on your pay over a 4 week period. Receiving your bonus will impact any statutory benefits that you receive. Please refer to the HMRC website or a tax advisor for more details. Here are some examples of how Income Tax and NIC might affect your : Example 1 If you don t normally pay Income Tax and NIC on your Tesco pay. If you choose to take your between June 2015 and May 2017 it may be subject to NICs only. Jenny earns 6,800 per annum She is not in the pension scheme and has no other earnings outside of Tesco. Her gross pay for 4 week period Total payment received in that 4 week period = Example 2 If you normally pay NIC on your Tesco pay, but you don t normally pay Income Tax. If you choose to take your between June 2015 and May 2017 it may be subject to Income Tax and NICs. Ravi earns 10,400 per annum He is a member of the pension scheme and has no other earnings outside of Tesco. Ravi normally pays NIC, but he doesn t normally pay Income Tax because his Tesco pay is below the Personal Allowance for 2015/16 tax year ( 10,600). Annual earnings 10, Total annual earnings = 10, The increase to this pay packet means that Jenny is still not liable to pay Income Tax, but she will be liable to pay 12% NIC on any earnings above 620, which is Total payment received Earnings NIC free = Earnings liable for 12% NIC If Jenny waits until June 2017 to receive her, the NIC will be paid on her behalf and her final award received will be The increase to this pay packet means that Ravi s NIC will increase and he is now liable to pay Income Tax on any earnings over the Personal Allowance limit. Total annual earnings NIC payable on = (12% of ) Income Tax payable on = (20% of ) Income Tax payable 12% NIC payable = 10.6% NIC payable Final award = Final award received received Personal Allowance 10, ,600 = Earnings liable for 20% Income Tax If Ravi waits until June 2017 to receive his, the Income Tax and NIC will be paid on his behalf and his final award received will be Example 3 If your Tesco pay is already subject to both Income Tax and NIC. If you choose to take your between June 2015 and May 2017 it will be subject to Income Tax and NICs. Aliyah earns 12,000 per annum She is not in the pension scheme, has no other earnings outside of Tesco and normally pays 20% Income Tax on her earnings over the Personal Allowance limit. Income Tax payable % NIC payable = Final award received If Aliyah waits until June 2017 to receive her, the Income Tax and NIC will be paid on her behalf and her final award received will be 432 If you are a higher tax payer If you re paying a higher rate of tax (40% or 45%) and choose to take your before June 2017 the NIC rate on your will be 2% and therefore the effective Income Tax and NIC rate to use when calculating your net will either be 42% or 47%. Important notes You need to take any other earnings from outside Tesco into consideration when calculating the value of that you will receive. The rates for Income Tax and NIC will change in the 2016/17 tax year. If you are a member of the current Tesco Pension scheme you may be liable to pay a lower NIC. For Income Tax and NIC allowances and rates see the HMRC website: 4

5 When do you want to receive your bonus? You can choose to receive your at any point between June 2015 and June Make your instruction by the Monday before pay day and you will receive your bonus payment on the following pay day. Your will be paid to you with your earnings on the applicable pay day. If you want to receive your at the earliest opportunity - 5 June you need to make your instruction by 23 April 2015 (midnight). OR you can wait and automatically receive your award in June If you let us know by 23 April June June July 2015 You ll receive your payment on 5 June July July August 2015 These dates continue until May 2017 You can find a full list of payment dates and the cut-off dates for instruction on OurTesco.com 5

6 How to make your instruction Choose from three simple ways to make your instruction. All you ll need is your Colleague Payroll Number (shown on your payslip and Privilegecard) and your Date of Birth. Text Send the following text* message to ( if texting from overseas) cashbonus Followed by: [space] Colleague Payroll Number (8 digit number including leading zeros if applicable) [space] Date of Birth in the following format DDMMYYYY [space] yes You should receive a confirmation text reply, please keep this until you receive your payment. Example: cashbonus yes Phone Call ** ( if By dialling Phone from overseas) and follow the instructions you hear. The call should take no more than three minutes and can be made at any time of the day. At the end of the call you ll need to take note of the confirmation number, as this will validate your instruction, and keep it until you receive your payment. Online Visit website: tesco2012 cashbonus.co.uk Follow the on-screen instructions. Once you ve submitted your instruction you can receive a confirmation , please review and print or save this for your reference. * Texts will be charged at your standard network rate. ** Calls to Equiniti 0871 numbers are charged at 8p per minute plus network extras. The Terms and Conditions for this Service can be found at tesco2012cashbonus.co.uk and OurTesco.com. For your own benefit you should read these terms carefully before giving an instruction. If you do not understand any point or require them in an alternative format such as paper, braille or audio please call (or if calling from outside the UK). 6

7 Questions & Answers Who is eligible to receive a? All Tesco colleagues who joined the business on or before 25 February 2013 and remain employed on 22 May What happens if I leave before taking my? Reason for leaving Retirement (including full & partial ill health) Redundancy TUPE Out Dismissal or Resignation after 22 May 2015 Dismissal or Resignation before 22 May 2015 You will receive your up to 12 weeks after leaving. This will be a grossed up payment so that the amount you receive after any Income Tax and NIC deductions will be your full award. You will receive your up to 12 weeks after leaving. Your bonus will be subject to Income Tax and NIC if liable. { Not eligible to receive award. What happens if I do nothing? If you don t make an instruction to receive your bonus before May 2017 then you will automatically receive your bonus in June This will be a grossed up payment so that the amount you receive after any Income Tax and NIC deductions will be your full award. How will I receive my bonus? Your bonus will be paid into your bank account with your earnings on the relevant pay day. The bonus will be shown on your payslip as a SIP payment. How has my award been calculated? Your has been calculated as 3.6% of the greater of your eligible earnings in the 2011/12 or 2014/15 financial year. Your eligible earnings include your base pay and will include other payments e.g. overtime. There are some other elements that are excluded e.g. location pay. Everyone s pay is different so if you have any questions on what this means for you, your Personnel Manager will be able to help you. Is there a cap on the value of the? Yes, the award is capped at Will my be subject to Income Tax and NIC? Your will always be subject to Income Tax and NIC if liable. However, if you choose to take your award in June 2017, you will receive a grossed up payment. What does grossed up payment mean? If you wait until June 2017 Tesco will pay any Income Tax or NIC on your behalf, therefore the payment you receive into your bank account after any Income Tax and NIC deductions will be your full award: 3.6% of your earnings. Why are the Income Tax and NIC rules different based on when I receive my bonus? The scheme tries to mirror the Income Tax and NIC rules of the Shares In Success scheme. With Shares In Success, if you sell your shares after three years Income Tax and NIC is payable on this money. The difference between the two schemes is that after five years with the Shares In Success scheme, the shares became genuinely tax free. That is why you receive a grossed up payment if you take your at the end of the scheme in June Why is June 2015 the earliest that we can receive? The communication we sent to you in 2012 stated that you would be able to take your bonus in May The new Financial year starts in March and the pay day in May 2015 is as early as Friday 8 May therefore, in order to be able to process the awards and give colleagues time to make a decision the first payment date will be 5 June 2015 payday. Where can I find more information? You can call the Equiniti helpline on * ( if dialling from overseas). You will also find more information on the page of OurTesco.com. Alternatively you can also talk to your Personnel Manager. 7

8 Please recycle this pack once you are finished with it. If undelivered, please return to: Tesco Returns Management Department PO Box Birmingham B25 9GP