insideKENT Magazine Issue 69 - December 2017 | Page 189
BUSINESS
HAVE YOU
P11D’D YOUR
CHRISTMAS
TURKEY?
BY RICK SCHOFIELD, TAX PARTNER AT WILKINS KENNEDY
IT’S THAT TIME OF YEAR WHEN OUR MINDS TURN TO GIVING A LITTLE SOMETHING
FOR CHRISTMAS. EMPLOYERS PARTICULARLY WILL WANT TO REWARD
HARDWORKING STAFF FOR THEIR EFFORTS THROUGHOUT THE YEAR AND IN TURN,
YOUR EMPLOYEES WILL APPRECIATE THE GESTURE OF A GIFT. TO MAKE THE DEAL
EVEN SWEETER, THERE COULD BE SOME TAX ADVANTAGES ALONG THE WAY TOO
– BUT BEFORE YOU TREAT YOUR TEAM, IT PAYS TO CHECK HMRC GUIDELINES AS
THE LINE BETWEEN WHAT IS CATEGORISED AS TAX FREE AND WHAT MAY INCUR
A TAX LIABILITY IS A FINE ONE.
What counts as a gift? Well, to the tax man, it
could be a different thing to what the rest of
us recognise as the simple exchange of a little
something wrapped in shiny paper.
Depending on what you give, HMRC could
recognise the gift as taxable.
Employers are allowed to provide staff with a
seasonal gift such as an ordinary bottle of
wine, a box of chocolates at Christmas, or
even the turkey itself; these all fall under the
banner of trivial benefits, meaning they’ve no
real resale value and cost less than £50.
This £50 rule applies regardless of the size of
your organisation. If you are a larger employer,
and therefore you have a large head count,
the total cost of providing a gift to each
employee can mount up considerably,
however this is of no relevance to HMRC. As
long as the gift in question is a trivial one for
each employee, the taxable benefit is the same.
As such, if a benefit is deemed trivial, it does
not need to be declared on either a P11D form,
or included in a PAYE Settlement Agreement.
However, should you decide to scale-up staff
gifts from a bottle to a case of wine, or pop
your turkey into a Christmas hamper alongside
all the trimmings, you will need to consider
the contents and cost before being able to
determine whether the benefit is trivial or not.
If it is not, which is highly likely in the case of
these two examples, the cash equivalent must
be taxed using form P11D, or PAYE Settlement
Agreement. So, you might want to think before
you start to record turkeys on P11D, as it could
be avoided.
If that sounds too complicated, you might
consider an alternative in the form of a small
bonus or cash payment to employees. If you
do this, these will be taxable at source,
attracting both PAYE tax and National
Insurance. This also applies to store vouchers,
which are also subject to tax for the full value
of the voucher.
So, if after weighing up the pros and cons,
employers wish to provide st ore vouchers
for their staff, without having to report them
as a benefit in kind, a PAYE Settlement
Agreement can be arranged with HMRC. This
allows the tax and NICs to be calculated on
the grossed up amount of the voucher, and
the employer pays this on behalf of the
employee; a win-win in the interests of
preserving Christmas spirit.
Of course, don’t let the taxman put you off the
spirit of giving, but if you would like some
further advice about rewarding staff, Benefit
in Kind or any other employment or tax
issues, please contact Wilkins Kennedy in
Ashford, Canterbury, Maidstone, Orpington
and Sandwich.
Local offices:
Ashford: 01233 629 255 / Canterbury: 01227 454 861
Maidstone: 01622 690 666 / Orpington: 01689 827 505
Sandwich: 01304 249 997
[email protected]
www.wilkinskennedy.com
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