MANY employers will be considering how to thank staff for their efforts over the past 12 months with Christmas now fast approaching.
Without careful planning, however, some employers could land their staff with an unexpected tax bill following the holiday season.
HMRC’s rules on the tax implications of gifts and entertaining as follows: 1 Gift vouchers provided to staff are liable to NIC and tax. NIC should be collected through the payroll and benefits declared on form P11D. If employers complete a PAYE settlement agreement they can settle the additional tax bills on behalf of their staff.
2 Trivial gifts of nominal value, such as a bottle of wine, can be provided to staff tax free.
3 Without exception, all cash payments must be put through the payroll with PAYE and NIC calculated accordingly.
4 Up to £150 (including VAT) per member of staff can be spent on parties and entertaining, with no tax implications, providing the functions are open to staff generally. The £150 limit, however, needs to cover all functions during the year, including transport costs. If the limit is exceeded, the full cost of the event will then need to be reported as benefit.
5 Non-cash rewards for long service of over 20 years can be provided up to the value of £50 per year tax free, providing no such reward has been given within the past 10 years.
For further advice on tax and accounting matters, contact Jane Jordan at Lentells on 01460-64441 or email firstname.lastname@example.org.