Shropshire employers and their staff could be missing out on an unexpected Christmas tax bonus this year. DY’s Tax Manager, Martyn Bramwell, said traditionally at this time of year, employers who wanted to reward their staff for all their hard work during the year would give out a Christmas bonus.
“Obviously with the recession and tougher trading times lately, this tradition may have been less well observed, but with the economy improving, maybe it’s time to reintroduce it.
“And the good news is, that HM Revenue and Customs have introduced an exemption for benefits costing less than £50 so your Christmas gifts may qualify.”
Martin said “trivial benefits” that met the criteria meant neither the employer or the staff member would pay tax or National Insurance on the gift.
“But there is a catch – the trivial benefit cannot be cash or a cash voucher, or cash redeemable, so you may need to think more laterally about the kind of gift you plan to give to your employees.
“As long as the trivial benefit doesn’t cost more than £50, it will definitely qualify under the guidelines, so maybe a turkey, a box of chocolates, or a bottle of wine will be fine.
“But the benefit must not be a direct reward for services carried out as part of their general day-to-day job and must not be included in the employee’s contract.
“There isn’t a limit to the amount of benefits you can give to a standard employee, but you should use common sense as HM Revenue and Customs will be watching your accounts carefully.
“And trying to write-off 200 payments of £50 to one employee just so you can get the tax benefits would almost certainly attract a lot of attention with HMRC looking into the payments in great detail.”
Martin said the situation was different though for directors of limited companies, as there was an HMRC limit in place of £300 per year per director on trivial benefits – including benefits given to their family members or household.
“These gifts may be called trivial benefits, but they are in fact far from trivial, and could make a real difference to your company’s tax bill if you follow the rules carefully.
“At this expensive time of year, using the trivial benefits guidelines wisely could be one of the best presents your company can give you.”
Dyke Yaxley’s Martyn Bramwell