RTI start date
Q: I am a small employer and I have been reading about Real Time Information. Can you tell me when I will need to be RTI-compliant?
A: I am afraid I am not in a position to advise you of an exact start date. Frustratingly, HMRC have not finalised the full migration timetable but they have announced plans to have most employers operating Real Time Information (RTI) by April 2013.
You should by now have received a letter from HMRC telling you what you need to do in the run-up to RTI. And HMRC are planning to write to everyone again in February 2013 with confirmation of their start dates.
Category: Payroll
Staff Christmas Party
Q: I would like to arrange a staff Christmas party to reward my employees for their hard work over the last year. It would be nice if we could invite partners to make it a special evening, but will this then be a taxable benefit in kind?
A: The cost incurred of holding staff parties/ social events can be provided as a tax-free benefit, providing certain requirements are met. The events must be annual, open to all staff to attend and the amount spent per head must be less than £150 per (including VAT).
If the total cost per person for all functions during the tax year exceeds £150, the exemption can still be claimed but only if the first two criteria above are met and the events individually cost less than £150 per head.
The exemption cannot be deducted against the cost of any event where the amount per head has exceeded the annual limit. Expenditure for any event not covered by the exemption would be a benefit in kind and need to be reported on the end of year form P11D accordingly.
Expenditure for staff entertaining is allowable as a deduction in your accounts on the basis that it is incurred for the benefit of your employees. For VAT purposes, input tax an be recovered on the proportion of entertaining expenses relating to employees only and not on any such expenditure relating to other guests.
Category: General Business
Christmas Gifts
Q: I’m looking at what to order for my employees for their Christmas presents. Is there any advice you have for me? I want to make sure the business gets tax relief and can recover any VAT it incurs, but more importantly, I don’t want my employees to pay tax or National Insurance on their gifts.
A: If you buy your employees a seasonal gift such as a joint of meat, a bottle of wine or a box of chocolates, then this would be deemed ‘trivial’ and therefore, there are no reporting requirements and nor would any tax or National Insurance be triggered.
However, if your gifts are more lavish than the examples above- say a hamper or a case of wine- then the cash equivalent must be taxed via the payroll, form P11D or a Pay As You Earn Settlement Agreement (PSA). With the first two options, tax and National Insurance will be triggered and will be deducted from the employee. However, with a PSA the employer agrees to settle their liability.
Category: General Business
