The festive season of goodwill is upon us as Christmas fast approaches.
It is a time of year when employers look to reward their staff for their efforts over the past 12 months.
But they should be aware that particular tax, National Insurance and reporting obligations 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 employee, covering each staff member and additional guests.
The total must include VAT and other costs, such as transport and accommodation.
All staff must also get an invite. If you spend more than £150 per person, the entire amount is a ‘benefit’ and must get declared on the P11D, and tax will be due.
Getting gifts right
Trivial benefits are items of value given to an employee that does not count towards taxable income or National Insurance Contributions (NICs).
The gift must meet ALL of the following conditions to qualify
- The gift is not part 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
Trivial benefits might include a Christmas lunch, a small present, or a wedding day gift.
If the gift does not meet the criteria, it must get reported to HM Revenue & Customs (HMRC) as a benefit in kind and taxes paid.
What about incidental expenses?
Described by HMRC as expenses “incurred by an employee while travelling overnight on business”, incidental expenses can include purchasing newspapers, dry cleaning bills or hotel telephone use.
These incidental expenses must not exceed £5 per night for UK travel and £10 per night if overseas.
Unsure of what expenses you can claim? Let us help you give workplace gifts tax-free by getting in touch.
Link: Tax on trivial benefits
