As an employer, do you often give out treats to your employees, small gifts or perks? Perhaps you do just because that’s the kind of employer you are! It’s a lovely way to keep momentum going and put a smile on your employees’ faces.
But you’re also probably aware that that in doing so will also mean that your accountant will probably just check to see if your purchases are liable for tax, or to see whether your employee will in fact have received a benefit in kind. Potentially a lovely gesture to an employee could be a headache and more hassle in terms of tax implications.
You may not know that earlier this year, the Finance Bill contained some legislation which makes it easier to reward your employees without the fear of it backfiring and leading to your employee being penalised.
So what’s changed? There are certain benefits that are now allowed which weren’t before that have now been exempt from any tax implications.
Essentially, any benefit that is worth less than £50 is ok, as long as it isn’t cash or cash voucher (but high street vouchers are all right). Plus the benefit shouldn’t be included in the employee’s contract, or it shouldn’t be rewarded as recognition of any work related service. It just has to be given because you are nice and want to make your staff feel good (so no need to feel guilty about the Double Deckers from the corner shop on a Friday afternoon!)
Plus, this exemption also applies to family members, so if your employee’s husband comes along to the Christmas party, for example, they will be able to share that benefit too for that particular event.
But what exactly is a trivial benefit?
So think of things like flowers for your employee’s birthday, or team lunch out, Christmas presents etc. This is a great guide of examples from HMRC if you aren’t sure: https://www.gov.uk/government/publications/tax-exemption-for-trivial-benefits-in-kind-draft-guidance/tax-exemption-for-trivial-benefits-in-kind-draft-guidance
If you think about it as a present which is given freely, and has nothing to do with team performance etc. So bonuses, team treats for winning a contract or meeting targets wouldn’t come under this exemption.
So, knowing this now, will allow you to think about motivating your employees without fear of reprisal, and you can get your creative cap on and really spend some time thinking of different ways of treating your employees. (For example, we know that Ray has got his eye on some new Scalextric models for the track)!
It really does lift the office, and gives you a feel-good feeling too! So don’t worry, we won’t be breathing down your neck when you try to do something nice (as long as it’s under £50 nice!)