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Christmas Bonuses, Gifts and Parties

December 2, 2019 by JSO

Christmas Bonuses, Gifts and Parties

Are you considering paying your employees a bonus in their December payroll?  Bonuses are a good incentive and thank you to hard-working employees, but should you slip them £50 cash in their pocket?

The answer to this question is most definitely “no”.  All bonuses, commission, overtime, tips etc. MUST be paid through the payroll.  Tax, NI and Auto Enrolment pension contributions do need to be paid on this income in exactly the same way as normal salaries.

Can I treat my staff to a gift?

You can, but you do need to determine whether the gift  could be resold or exchanged for cash or if it could be deemed a trivial benefit and will, therefore, be exempt from tax.

What is a trivial benefit?

A trivial benefit is an unexpected gift for no particular reason, other than the boss being in a good mood today!!

HMRC rules state that a trivial benefit has to meet ALL of the following criteria:

  • 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

 

Why not give a turkey as a gift this Christmas?  Providing it does not become a regular gift each year, it could be a trivial benefit.  We will write more on trivial benefits at a later date; keep an eye on future blogs from Just Simply Organised.

 

Staff Christmas Party a good idea?

 

There are times when a party for your staff can be completely exempt from tax and National Insurance, providing the following rules are adhered to:

  • £150 or less per head
  • annual, such as a Christmas party or summer barbecue
  • open to all your employees; sadly not partners

 

If the company decides to pay for partners, it will be a non-allowable expense.

 

Confused?  Not sure of the rules?  Why not call Just Simply Organised for help with all of your bookkeeping and payroll requirements?

 

 

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