With Christmas fast approaching, we have pulled together our 12 top festive tips this season!

Trivial Benefits

You can give your staff a trivial benefit tax free if you meet the following conditions
·        it cost you £50 or less to provide
·        it isn’t cash or a cash voucher
·        it isn’t a reward for their work or performance
·        it isn’t in the terms of their contract

HMRC showing that they are typically out of touch give some examples such as a bunch of flowers or an “ordinary” bottle of plonk. They obviously have an expensive taste in wine.

However more commonly it is better to provide gift vouchers e.g., Tesco, or Amazon as these tend to be the handiest especially at this time of year.

If you are a limited company director, then you can also include yourself in this – up to a maximum of £300 per year. Technically there is no limit for employees, but we would recommend keeping under the £300 limit.

Christmas Parties

Who doesn’t look forward to the office Christmas party? The chance to eat and drink too much at the company’s expense, an opportunity to let your hair down. Maybe after a few drinks, you will build up the courage to ask out the girl (or boy) from marketing or ask your boss for a Christmas bonus.

Well, what are the tax rules? The good news is that is tax exempt if the cost per head does not exceed £150 per head (including VAT) – that doesn’t buy you many “ordinary” bottles of wine. Also, everybody has to be invited – even the person that nobody likes. It doesn’t have to be all employees that are attending, so if you are lucky (unlucky) enough to be able to take your partner then they are included in the £150 per head limit.

However, this limit, includes food, drink, accommodation, travel etc so it doesn’t go far. It is an exemption not an allowance – go a penny over the £150 and the full cost becomes taxable.

So, if your boss suggests that the office party is going to be in local ‘Spoons and you are getting the bus home, then that is the reason.

Charitable Donations

Christmas is the time for giving and many people’s thoughts turn to those less fortunate.

The good news is that if your company makes a donation, then this is fully deductible for corporation tax.

There are plenty of charities that have Christmas campaigns or donating to your local food bank can be a good idea.

It doesn’t have to be cash – you can donate stock, equipment, or furniture that maybe you don’t need and still receive tax relief.

Paying your staff early

It is unusual to pay weekly staff early – it depends when Christmas day falls – this year it is on a Sunday and the normal weekly pay date would be Friday 23^rd – however it might be worth considering paying a day or so early – to benefit those last-minute Christmas shoppers.

Some employers (who may be closing down for the Christmas period) will pay a “double week,” or at least setting up the payroll in advance. This is common even if you have staff working during the Christmas break – for example, the hospitality industry. However, you need to watch the processing date as this may affect employees benefits such as Universal Credit.

Your payroll processor will often ask you for estimated hours for this week, then amend early adjustments in the new year. It is an extremely busy time of the year for payrollers – so always try and keep them happy by providing the information as early as you can.

It is a bit different for monthly staff, with the normal pay day being the 28^th or the last working day of the month – this is often brought forward to pre-Christmas – means people have money for the all the Christmas spend – however it does make January a “long” month.

Client gifts

It is vitally important to buy your accountant an expensive gift! Only joking – but it can be a good idea to buy key customers, suppliers or contacts a Christmas gift – either as a thank you for their custom – or just to be nice…

There are fairly restrictive rules on getting tax relief – it has to

• Cost under £50
• Not be food or drink
• Not be a gift voucher
• The gift must carry an advertisement for your company – e.g., your logo

So, this is why you are likely to receive lots of branded pens/calendars/mouse mats rather than bottles of whisky or hampers.

Client Entertaining

It is often good especially at this time of year to catch up with customers or potential customers.

According to HMRC business entertaining is where the following conditions are met

• Entertainment is provided (even if it is a panto….)
• It is provided to people who are not employees (this is covered by different rules)
• The entertainment is provided for free

The definition of entertainment is wide ranging – food, drink, accommodation, concert, or sports tickets, etc. Basically, anything where you are enjoying yourself – which HMRC don’t like.

You can pay this through the business, at is a legitimate business expense, however it is not allowable for tax, and you can’t reclaim the VAT. Bah humbug.

Staff Bonuses

Remember the good old days when employers paid Christmas bonuses (although many still do) and this was often a crisp £50 note in a card – often accompanied by a selection box. (Curly Wurly’s are our favourite).

However, I’m afraid this all taxable. PAYE, Employee National Insurance and Employer National Insurance – there is no silver bullet to pay an employee tax free cash – even at Christmas.

Staff Expense payments

There are some expense payments that you can pay your staff tax free.

You can provide a laptop, tablet, computer etc tax free to your employee as long as the private use of this is insignificant. However, there is no restriction on private use if you provide your employees with a mobile phone.

You can pay your employees a “Use of home allowance” tax free, which is £6 per week or £26 a month, or a lump sum of £312.

In some cases, you can pay your employees broadband bill, but only if they didn’t already have one (which may be unlikely), and they need it to work from home.

These are not huge amounts, but if you were getting £26 a month and your mobile and broadband paid then you would be a happier employee.

However, always bear in mind – although the employees get this tax free – it is still an additional cost to the company.

Volunteering

Many organisations allow their employees time off to volunteer – this is usually fully paid so the employee doesn’t lose out financially.

Especially as this time of year people may want to volunteer at a food bank, or a homeless charity.

Another option is to organise a company wide involvement in a local project.

There are no direct tax savings, but reports say this is hugely valued by the employees and helps with staff retention and motivation.

Christmas Music

Another bah humbug one. This time of the year it is more likely that you will be playing music in your workplace. This is fine, if your workplace is purely for employees, but if you have a space for customers or the public – you need to be wary of the Performing Rights Society. You could potentially be fined for playing music in a public place.

In our opinion it is a good reason not to play Slade on a continuous loop.

Healthy benefits

After all the Christmas excesses, peoples’ thoughts turn to being healthier. In January gym memberships soar as do sales of diet books.

You can provide gym memberships to your employees. Normally you get a corporate discount and although it is taxable (through payrolled benefits) it can be a good incentive to offer.

Also, as a company you can provide food for your employees’ tax free – this can take the form of fruit boxes or healthy pre-prepared meals. Again, promotes a healthier lifestyle among your employees.

 

And Relax

We have saved the most important tips for last. If you get the chance to have some time off, then make sure you make the most of it. Switch your laptop off, don’t read your emails, spend quality time with your family and friends.

 

Merry Christmas from all at Advantage!