How often do you treat your staff?
Being a lovely employer and giving your staff little treats before April 16 often ended up with accountants telling you that your gift has landed your staff an unwanted tax charge.
From April 16 there is a new exemption which everyone should be taking advantage of!
The exemption covers “trivial benefits”.
At its most simple, the new rules state that gifts to employees, their family or household members by their employer are not taxable so long as:
- The cost is under £50
- The benefit is not cash or a cash voucher
- The benefit is not contractual or habitual (ie done every month)
- The benefit is not linked to performance or in recognition of a particular service provided by the employee, so no bottles of champagne for reaching a target or clinching a deal
There is no limit to the number of gifts that can be given to staff members in a year – but if the cost of a gift is over £50, the whole lot is taxable not just the excess.
That sounds great – but before you get carried away – there is a limit imposed on close companies (that is a company controlled by less than 5 people – so in reality – most family companies.) For these companies there is an annual cap of £300 per director, which is still generous. Gifts to any family member, who is not themselves an employee would be included in the director’s limit.
There are lots of examples provided by HMRC as to what qualifies – but things such as birthday presents, flowers on special occasions, Xmas gifts for staff, theatre tickets, would all potentially qualify. So up to the limit, for family companies, these should all be going through the company from now on!
You do need to note that the exemption is only on the tax the employee would have suffered – there is no change to the tax in the company. For example if you pay for a birthday meal out – it may still count as entertaining which would not be allowable for corporation tax in the company.
So what are you waiting for – go ahead and treat your staff (and directors) every now and again!
Im off to enjoy the chilled bottle of wine the company has just very kindly treated me to – what a lovely employer I have!!