CHRISTMAS CHEER FOR EMPLOYEES
I t has been a grim year, so if your employees have worked all the way through the pandemic they deserve a big ' thank you' which you may choose to mark with a gift or a virtual party.
A surprise gift can be provided to each employee tax-free as long as it is neither cash nor a cash voucher and the cost does not exceed £50 per person. These trivial gifts must not be provided in return for the employee's normal service and they must not be a contractual entitlement. For employees who are not the company's directors or their family members there is no limit to the number of trivial gifts that the employer can give during the year. However a gift-card that is topped up at intervals with £50 each time would fail this test as the total value given in the year would be counted as one gift. Trivial gifts to directors and their family members are subject to an annual cap of £300.
Online or virtual parties can qualify as an annual staff event, just like a physical party. This means that employers can splash out up to the tax-free annual limit of £150 per person. But be careful of that limit as if it is breached the whole amount is taxable and subject to NIC. You could send a food hamper to every employee for them to enjoy while attending the online party and provide a form of entertainment such as a live comedian, music or a quiz, as long as it is all delivered in a socially distanced way.
This article is extracted from the December 2020 Newsletter.