THE festive season is the perfect time for businesses to thank their employees for their hard work throughout the year.
Although it’s good for bosses to show staff their appreciation, SBP Accountants and Business Advisors – which has offices in Aberdeen, Peterhead, Banff and Fraserburgh – warned they need to take care or they could receive an unwanted gift from the taxman.
Alan Masson, head of tax at SBP, said it is important for bosses to remember tax rules don’t change at Christmas, although some concessions are granted by HMRC.
Mr Masson said: “The festive season is a time for giving, and we understand that bosses will be thanking clients for their custom, and rewarding staff for their dedication throughout the year, but they need to think about their choice of reward so they don’t get any nasty surprises.”
Here, Mr Masson highlights the important tax rules to follow this festive season:
Business entertainment: Businesses entertaining clients will not receive tax relief on the costs of doing so. In some cases, if staff are involved, the HMRC might actually seek benefit charges.
Time to party: Annual parties at Christmas or an alternative function of a similar nature, which is open to all staff generally, and where the cost is no more than £150 per head can be provided by an employer without a benefit in kind charge arising on the employees.
The joy of giving: If an employer provides cash bonuses or gifts to employees they are taxable in the normal manner through PAYE.
If the employer provides vouchers that can be exchanged for cash they are taxable as are non-cash vouchers which should be declared in form P11D. They should be put through the payroll for NIC only. Most vouchers are therefore liable to tax and NIC, although there are some specific exemptions that can be found on the HMRC’s website.
Trivial pursuit: Small ‘trivial’ gifts such as turkey, a bottle of wine or a box of chocolates will not be taxable if given in isolation. Together there may be a taxable benefit. Hampers would certainly be classed as chargeable benefits – as would anything else not regarded as ‘trivial’ by HMRC.
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