Some employers may wish to give their employees a small gift or throw a staff party at this festive time of year. But what are the tax implications?
Small gifts to employees
Gifts can be classed as ‘trivial benefits’ and therefore exempt from tax as long as HMRC guidelines are adhered to:
- the cost of providing the benefit must not exceed £50 per employee
- the benefit must not be in cash form (including cash vouchers)
- the benefit must not be a reward for work or performance
- the employee must not be contractually entitled to the benefit
- the benefit must not be part of a salary sacrifice arrangement
One of the main conditions of tax exemption is that the cost of providing the gift or benefit must not exceed £50, including VAT. On occasions where an employer provides a benefit to a group of employees and the precise cost per person cannot be established, the average cost per employee can be used.
Where the gift consists of more than one item, e.g. a bottle of wine and a box of chocolates, then the total cost of the gifts is the cost of providing the benefit.
It should be noted that if the cost of the benefit exceeds £50 then the full cost becomes taxable, not just the amount exceeding £50.
The rules are different where the employer is a ‘close’ company and the benefit is provided to an individual who is a director, an office holder or a member of their household or their family. In this case, the exemption is capped at a total cost of £300 in a tax year.
HMRC guidelines for providing tax exempt parties / social functions for employees are basically that:
- the cost of the event must not exceed £150 per head
- the party / social function must be an annual event
- the party / social function must be open to all employees
Multiple annual parties / social events can be tax exempt as long as the combined cost of the events does not exceed the £150 per head limit.
If you’d like further information or advice on this, then please do contact us or refer to HMRC’s detailed guidance.
With a new tax year fast approaching there are some key changes to be aware of:
- the tax free personal allowance will increase to £11,850 and the new emergency tax code will be 1185L.
- the National Living Wage NLW (for those aged 25 & over) will increase from £7.50 to £7.83.
- the National Minimum Wage NMW will increase as follows:
Employees aged 21-24 – from £7.05 to £7.38
Employees aged 18-20- from £5.60 to £5.90
Employees aged under 18- from £4.05 to £4.20
Apprentices aged under 19, or aged over 19 in the first year of their apprenticeship – from £3.50 to £3.70
- the minimum contribution rates for workplace pension schemes will increase to 5%, with a minimum of 2% employer contribution. (eg. employer 2%, employee 3% contribution)
- Statutory Sick Pay will increase from £89.35 per week to £92.05 per week.
- Statutory Maternity, Paternity, Adoption and Shared Parental Pay will increase from £140.98 per week to £145.18 per week.
the repayment threshold for student loans will increase as follows:
Plan type 1 loans from £17,775 to £18,330
Plan type 2 loans from £21,000 to £25,000
Please do not hesitate to contact us if we can help you meet your payroll and workplace pension duties.
Posted in Payroll
Tagged Auto Enrolment, national living wage, national minimum wage, NLW, NMW, PAYE, SMP, SSP, student loans, tax, workplace pensions
From 6 April 2015 there will be a statutory exemption for certain non-cash benefits in kind costing up to £50.
Currently, there is no minimum cost threshold below which benefits are disregarded for tax purposes, but from 6 April employers who provides certain low value benefits-in-kind to their employees will, in some circumstances, become exempt from income tax. This will remove the need for annual reporting of such benefits via P11Ds or PAYE settlement agreements (PSAs).
A trivial benefit will be exempt from income tax, provided that:
- the benefit is not cash or cash vouchers per s75 ITEPA 2003
- the cost of providing the benefit, or its average cost per person does not exceed £50
- the benefit is not provided pursuant to a salary sacrifice scheme or any other contractual obligation
- the benefit is not provided in recognition of the employee’s service.
The following are examples of items that may be regarded as trivial benefits:
- a gift of flowers on birthdays, anniversaries or special events.
- workplace drinks eg. tea, coffee available to all employees.
- a Christmas turkey.
- a bottle of ‘ordinary’ wine.
- a box of chocolates.
Input VAT is reclaimable by the employer on the cost of trivial benefits made to staff.
An annual cap of £300 will be introduced for office holders of close companies and employees who are family members of those office holders. Those affected by this cap will be able to receive a maximum of £300 worth of trivial benefits in kind each year exempt from tax.
If you would like further clarification or advice on this subject, please do get in touch.
We’ve all had a few days to digest the contents of George Osborne’s Autumn Statement speech. With new measures including a package to help all businesses in England with the cost of business rates, an additional 50,000 start-up loans for entrepreneurs, an extension to the new Enterprise Allowance, the scrapping of employers NIC for the under 21’s and the scrapping of next year’s planned rise in fuel duty, was it good news for SME’s?
Our summary, plus a reminder of other key changes which are to take place from April 2014, is available here. If you would like advice on any of the topics raised, please do get in touch.
Physiotherapists, osteopaths, chiropractors, chiropodists, podiatrists, homeopaths and psychologists are among the health professionals being targeted in HMRC’s Health and Well Being Tax Plan campaign, launched on the 7 October.
Under the campaign health professionals with undeclared taxable income are being offered a time-limited disclosure opportunity to bring their tax affairs up to date ‘on the best terms available’. The opportunity to voluntarily join the scheme will run until 31 December, with a deadline of 6 April 2014 for the disclosure and settlement of unpaid tax.
Marian Wilson, Head of HMRC Campaigns, said:
“I urge health and wellbeing professionals to take advantage of our quick and straightforward way of bringing their tax affairs up to date. Help, advice and support is available.
“After the opportunity closes on 6 April, HMRC will use information it holds from third parties and regulatory bodies to identify people who have not paid what they owe. Penalties – or even criminal prosecution – could follow.”
If you would like further advice or assistance in relation to this campaign, we can help.
HMRC’s newly announced Let Property Campaign is designed to encourage residential property landlords to come forward and voluntarily disclose any undeclared rental income to HM Revenue & Customs (HMRC).
Although the campaign will be directed at all residential landlords, HMRC is particularly focusing on:
• Landlords who let to students/groups of workers.
• Landlords who let out holiday accommodation.
• Landlords who let out properties for multiple occupancy.
HMRC estimates that up to 1.5 million landlords may be underpaying £500 million in tax every year. In a departure from previous campaigns and in recognition of the sheer scale of the potential numbers involved, HMRC intends to run the campaign for at least 18 months.
Help is available for landlords by calling HMRC’s Let Property Campaign Hotline on 03000 514 479 between 9am and 5pm, Monday to Friday. HMRC also intends to work with a variety of bodies over the next few months to develop tools and guidance, to enable landlords to bring their tax affairs up to date and then remain compliant.
The Let Property Campaign follows hard on the heels of the Property Sales Campaign, which is directed at people who may have sold residential property, in the UK or abroad, that was not their main home. Such property disposals are potentially liable to Capital Gains Tax. The opportunity to voluntarily disclose any undeclared property disposal proceeds closed on 6 September 2013 for the Property Sales Campaign.
If you would like further advice or assistance in relation to this campaign, please do get in touch. Telephone: 01242 223160, email firstname.lastname@example.org.
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