Regular readers (I assume there is more than 1 of you out there) will recall that last December I gave you the story of Mr Claus and his merry band of hard workers and the tax savings that were available to his company and how he could reward his employees.
Well, that special time of year is fast approaching but first we must get through Christmas and the New Year before SA filing deadline day! So a recap on what we can and cannot provide at Christmas is appropriate to consider how we can keep Scrooge (HMRC) away from parties and gifts and ensure we all have a happy tax free Christmas.
Much of the following relies on having a very good employer, which contractually I am obliged to say Dataplan Boyd fits the bill!!
Most of you will have heard of the £150 allowance at Christmas but what exactly does this mean? This is actually an annual, rather than Christmas allowance. Some employers have a summer function and a Christmas function. HMRC do put some stipulations on the allowance, when have they ever made things easy for us?
The functions must be open to all employees, whether they choose to attend or not is a different matter. Guests are also included within the allowance so if an employer opens up the function to staff members and partners, the partners get their own ‘allowance’.
Now for the money part. The £150 is the VAT inclusive figure and must cover all costs associated with the function such as food, drink, accommodation and transport.
A word of caution though. If the cost exceeds £150 per head, the whole of the amount becomes taxable!
Finally we have some clarity form Scrooge (HMRC) on gifts. This after years of arguing whether a £20 turkey is a benefit in kind or not! HMRC have announced that ‘Trivial Benefits’ to the value of £50 per annum will not attract Income Tax. So what is a Trivial Benefit? Simple, any gift that is not a cash voucher or cash. Cash vouchers and cash must go through the payroll. Non-cash vouchers can now be provided as part of the £50 allowance. So, employers can now give store vouchers to their staff at Christmas.
Gifts to Customers
Scrooge has excelled himself her. Businesses can send Christmas cards to customers and get tax relief for the purchase of the cards.
That’s the good news. If a business wants to provide gifts to customers it gets more complicated. Small promotional gifts up to £50 are okay. You get tax relief. However the bad news, and this covers the historical gifts given at Christmas such as alcohol and hampers. These, unless they are have the company brand or logo are entertaining and therefore not tax deductible. Bah humbug!!
However let’s finish this seasonal blog on a positive. Do you have the sniffles, shivery, bunged up? Good news! Employers can now provide employees with a flu jab thereby ensuring that there is not sick leave during the winter months!! HMRC will not seek to charge a benefit in kind and the employer will get tax relief. Everyone is a winner.