Your handy guide...

12th December 2019

As Christmas is nearly upon us here is a reminder of the tax free treatment of Annual Staff Functions and Trivial Benefits to Employees and Directors of businesses.

Annual Staff Functions

There is an annual exemption of £150 per head for annual staff function/s held during the year to cover such events as an annual Christmas function.

You do need to be careful when applying this exemption and we suggest that you speak to us first to ensure that the exemption applies particularly if the total cost of all functions is in excess of £150 per attendee.

Please note that this is an exemption not an allowance and the cost for any self employed staff attending the annual staff function will be added back when calculating the business taxable profits.

 

Trivial Benefits – tax free

There is a statutory exemption from income tax and NICs for ‘low-value’ qualifying non-cash benefits set at a £50 limit (inclusive of VAT) per gift per employee/Director.  A few examples of gifts covered by this exemption would be bottles of ordinary wine, turkey and non-monetary gift vouchers or gift cards that cannot be exchanged for cash.

 In order for these to be classed as tax free the following criteria need to be satisfied:

  • It costs you £50 or less to provide
  • It isn’t cash or a cash voucher
  • It isn’t a reward for the employees work or performance
  • It isn’t in the terms of the employees contract

Where cost of the gift or non-cash benefit is in excess of £50 there will be PAYE Tax and NIC implications on the whole amount not just the amount in excess of the £50.

HMRC have stated that there is no limit to the number of trivial benefits that can be provided to ‘employees’ of a company in any tax year however:

There is a £300 annual monetary cap for directors and other office holders of close companies and members of their families and households who are also employees of the company.

A quick guide to help you:

Type   

Taxable             

NI'able        

Action        

Cash or vouchers that are exchangeable for cash

 

YES

YES

Advise your payroll adviser to include in the wages

Non-cash vouchers or gift cards with a value of £50 or less, not exchangeable for cash

 

NO

NO

None

'Insignificant' gifts which cost no more than £50

 

NO

NO

None

Other 'larger' gifts with a value in excess of £50

 

YES

 

YES

 

Contact Clear Vision to discuss tax treatment

 

 

 

To discuss any aspect above, call our friendly team on 01249 712074.