Christmas - A time for giving!?
As the festive period moves into full swing, it should be remembered that a happy workforce is a productive workforce, and what better way of showing your appreciation for all the hard work put in during the year than with a Christmas gift!!!!
With this in mind, it should be noted the pitfalls that should be avoided, so that you don’t get a tax headache!
A direct gift of cash or “vouchers” to your staff will result in a taxable benefit, and potentially tax and national insurance will be due. However, instead of providing cash, there are other alternative “gifts” that can be provided which are regarded as trivial by nature and exempt from tax and national insurance.
The revenue have confirmed that gifts such as turkeys, ordinary bottle of wine or chocolates are all exempt from tax. If the gifts were to extend beyond the nature of these gifts, then some consideration needs to be given as to whether the gifts would be of a “trivial” nature, for the exemption to apply. With this said, the government have announced in the Autumn Statement that from April 2015, trivial benefits of up to £50 will be exempt from tax and national insurance, so this sounds like a good rule of thumb to adopt.
In addition to giving a gift, you can also entertain your staff with an annual party. This can be as a Christmas party, summer outing, or similar annual function. In essence you can incur costs of up to £150 per employee, and an additional £150 for the “partner” of the employee as well if they attend. However, it should be noted that this isn’t an “allowance”, so if the cost of the function exceeds the £150 per head, the entire cost becomes taxable to the employee.
For further information please contact either Victoria Bishop, Tax Partner on 01900 603623 or Brett Bennett, Technical Manager on 019467 25808.