Make the festive season extra special with this useful tax relief
A trivial benefit is a tax-free, non-cash perk given to employees that is not subject to income tax or national insurance contributions. However, they must meet the following requirements:
- They must cost £50 or less to provide
- They can’t be cash payments or cash vouchers
- They can’t be a reward for work or performance
- They can’t be included in the terms of an employment contract.
Importantly, store cards that can be exchanged for goods/services are allowed and are no longer to be taxed via the payroll.
Here are a few other examples of treats you could offer:
- Give store vouchers to staff at Xmas
- Give flowers, chocolates, or wine etc. for staff birthdays or a personal milestone
- Take staff out for meals, for example, to celebrate a birthday.
Directors (of ‘close’ companies) can have benefits of up to £300 each year TAX FREE (6x £50 in one year, per director), for non-work-related reasons!
Just remember to keep detailed records to demonstrate that no benefit is due and ensure the cost of the benefit is the VAT inclusive amount.
Christmas fun – How will you be celebrating this year?
With the festive season approaching, Christmas parties will no doubt be on the minds of many businesses.
Christmas Parties are tax deductible if they meet certain criteria. Your event must be annual, open to all your employees and must not exceed £150 per person. If you allow employees to bring a guest, the cost of the guest will have to be absorbed within the £150 limit. If the total annual expense per employee exceeds £150, the total cost of the event is no longer tax deductible and becomes taxable as a benefit in kind requiring a P11D submission to HMRC for your employee.
If you would like any further information, please contact us.