Close your eyes and think hard. Perhaps a dark room would help? Step away from those twinkly lights and mince pies and consider all the things you provide for your staff at this time of year…
Should they learn a new Carol this year?
On the first day of Christmas my employer gave to me….mince pies to have with my tea.
Reasonable food when available to staff generally is an exempt supply for tax and so no need to report on either P11D or via your PSA. (NOT when part of a salary sacrifice scheme!). Claim any VAT back and claim a corporation tax deduction.
On the second day of Chrismas my employer gave to me … a parking space that was totally “free”.
Car parking spaces near their place of work – again top marks for you the employer. Exempt from tax and NIC as above. Claim your VAT back and a corporation tax deduction.
On the third day of Christmas my employer gave to me … a bouquet that was flowery.
A bouquet of flowers well, we are now possibly edging into tax unless the cost is trivial and you obtain clearance for it to be ignored for tax purposes. Otherwise they should be reported to HMRC on either the P11D’s (bah humbug) or within your PSA (Hurrah the Grinch is dead).
Claim the VAT back and a corporation tax deduction.
On the fourth day of Christmas my employer gave to me …. Office facilities.
You allow your staff to work late or start early and use office facilities for their online Christmas shopping and spreadsheeting their Christmas cash flow. Again, magnificently exempt!
VAT claimable as private use is incidental.
On the fifth day of Christmas my employer gave to me … screening to see if I’m healthy.
Health screening to ensure they are all blooming and ready for the rigours of the festive season. You are sitting very high now on the tax efficiency Christmas tree!
Any VAT is recoverable and the costs are deductible for corporation tax.
On the sixth day of Christmas my employer gave to me … gifts from another company.
Gifts received from business contacts are distributed to the staff – no cost to you and so no tax to the employee. No VAT to claim.
On the seventh day of Christmas my employer gave to me .. a bottle of wine and a turkey.
You provide a bottle of wine and a turkey to staff – again depending on what else has been provided to them through the year these might be agreed by HMRC as trivial and so free of tax. Otherwise they should be included in the PSA. The costs are deductible for corporation tax purposes.
On the eighth day of Christmas my employer gave to me …. Another turkey.
A hamper given to staff, even if only including a turkey and bottle of wine cannot usually be agreed as trivial and so PSA, unless you describe it as a turkey and a bottle of wine….?
Again any VAT can be recovered and a corporation tax deduction can be claimed.
On the ninth day of Christmas my employer gave to me … a wonderful party.
For the annual party you will need to add up all the costs of transport, perhaps overnight accommodation, free bar, meal, entertainer. If offered to all staff and if the price per attendees (including partners/spouses) is less than £150 VAT inc then it is tax free.
The input VAT for the employees costs is recoverable, and where you have charged a nominal amount for their partners/spouses attendance and accounted for output VAT on those amounts, you can recover the input VAT for them too!
Staff entertaining is deductible for corporation tax.
On the tenth day of Christmas my employer gave to me … a test of whether I can see.
Another tax free offer….you can pay towards an eyesight test, and the cost of spectacles or contact lenses required solely for VDU use that an eyesight test shows they are necessary.
An employer can also pay a proportion towards the cost of a prescription for an employee who is required to use a visual display unit (VDU) as part of their normal duties, and where their spectacles/lenses are for general use but include a special prescription for VDU use.
The cost of the eye test is deductible for corporation tax purposes.
On the eleventh day of Christmas my employer gave to me … a sparkly tee (shirt).
Clothing provided by the employer can be tax free where it has a fixed and prominent logo (– free advertising for your business too!). No logo would be loco! (for tax purposes).
The cost of clothing provided to staff is deductible for corporation tax purposes if wholly and exclusively for the purposes of the trade.
On the twelfth day of Christmas my employer gave to me … a session of therapy.
Once the New Year is looming, you could also offer welfare counselling to all staff – tax free although the counsellor won’t unfortunately be available to assist with any financial or legal issues which might have arisen over the festive season!!
Motto in your cracker should perhaps be…..CHRISTMAS NEEDN’T BE TAXING!!
So many options to cheer up your staff and many of them very tax efficient.
Please always check the tax implications for your business with a quick festive phone call to Christmas Carol in our specialist tax department.
For more information, please contact Carol Watters.