Coronavirus doesn’t need to wreck Christmas! Also though the typical workplace Christmas celebration could be outlawed, there are still ways to award your employees for their effort by providing them a tax-free gift in the type of a Benefit in Kind (BiK).
Gifting a Benefit in Kind to a worker
You can gift a Benefit in Kind (BiK) to your staff members that won’t be subject to tax obligation if:
The benefit is not cash or a money coupon (these will undergo tax).
The staff member is not entitled to the advantage as part of any kind of contractual obligation such as a salary sacrifice system.
The benefit is not offered in recognition of particular solutions carried out by the worker as component of their duty.
The price of supplying the benefit doesn’t exceed ₤ 50 (including VAT).
You may want to give your workers an existing– a Christmas hamper, a container of red wine, or a nice box of chocolates. As long as it sets you back much less than ₤ 50 a head, it won’t be taxable. If the staff gifts surpasses this value, it will require to be reported to HMRC and will be taxed under the typical Benefit in Kind rules.
As an example, a company awards a ₤ 60 John Lewis voucher to their employee for Christmas. The entire award would go through both Income Tax and NIC as the total price surpasses the ₤ 50 restriction. It is essential for you to recognize that it is not simply the excess over ₤ 50, yet the sum total.
There is no restriction on the variety of trivial benefits that you can supply, as long as it does not exceed ₤ 50 each time. Nonetheless, where you are a ‘close’ company and the advantage is offered to an individual that is a director or various other office holder, the exception is topped at a complete expense of ₤ 300 for the tax year.
Your workers can save tax of ₤ 10 for basic price taxpayers and ₤ 20 for higher rate taxpayers each time you, as their employer, provide a trivial benefit present. Officers of a close business can conserve as much as ₤ 135 in tax.