The season of goodwill is just around the corner as Christmas approaches.
It is a time of year when employers look to reward their staff for their efforts throughout the year.
But they should be aware that certain tax, National Insurance and reporting obligations could apply.
We want to ensure that you enjoy the festive season just as much as your team, so we’ve put together our top tips to ensure that you stay on the right side of the taxman this Christmas.
What about staff parties?
According to HMRC, the total cost must not exceed £150 per head and must be for your employees and any members of their family and household who attend as guests. The total needs to include VAT and other costs, such as transport and accommodation.
All staff must also be invited. If you spend more than £150 per person, the entire amount is a ‘benefit’ and must be declared on the P11D and tax will be due.
Getting gifts right
Trivial benefits are items of value given to an employee that do not count towards taxable income or National Insurance Contributions (NICs).
To qualify, the gift must meet ALL of the following conditions:
- The gift isn’t in the terms of the employee’s contract
- It is below the value of £50
- It isn’t a performance-linked reward
- It isn’t cash or a cash voucher.
A trivial benefit in kind could include a Christmas lunch, a small Christmas present, or a gift on the day of an employee’s wedding.
If the gift does not meet all of the above criteria, it must be reported as a benefit in kind to HM Revenue & Customs (HMRC) and tax must be paid as appropriate.
What about incidental expenses?
Incidental expenses, as described by HMRC, are expenses “incurred by an employee while travelling overnight on business”.
These may include purchasing newspapers, paying for laundry or using the hotel telephone.
As long as the value of the expenses does not exceed more than £5 per night for travel within the UK and £10 per night for travel outside the UK, they do not have to be reported to HMRC.
Link: Tax on trivial benefits
Our BLOG
HMRC cut advisory company car fuel rates – What does this mean for your business?
TESTIMONIALS
The staff at CST are always very friendly and approachable.… Read more “Mr JD Dolling, SW Heating Equipment Ltd”
We have been with CST for more than seven years… Read more “Doris Francis, Engineering Services (Bridgend) Ltd”
Our business has been handled by CST for many, many… Read more “Mr & Mrs Rise”
I moved my business to Clay Shaw Thomas because I… Read more “Sandra Wilkinson of Sage Marketing”
The audit was well planned and executed efficiently, with minimum… Read more “GE Carpentry”
Privately and within the company Clay Shaw Thomas provides a… Read more “Seashore Enterprises”
I am very happy with the service from CST. An… Read more “Mr Atkinson “
The family connection with CST goes back many years and… Read more “Dr Jones”
CST are very efficient, courteous and proactive when dealing with… Read more “Mr CMG Adams”
I have been a client for over twenty years and… Read more “Mr J T Wall”
Always one step ahead of the game, CST have helped… Read more “Mr RT Evans”
CST Staff always give unbiased advice in a clear and… Read more “Mr L Branfield”
It has been a professional pleasure working with CST, they… Read more “Mr P Jenkins”
SUBSCRIBE to our list
If you would like to see full details of our data practices please visit our Privacy Policy and if you have any questions please email tellmemore@clayshawthomas.com.