Many employers like to thank their employees at Christmas in the form of gifts or bonuses. However, it is important to keep in mind the tax and NI implications.
If you struggle to find a gift that you can provide to the whole workforce without offending those of various cultural or religious backgrounds, a solution is on the horizon. But not until next Christmas! From April 2016 you will be able to give a gift voucher to the value of £50 (inclusive of VAT) in place of a gift.
For this year though, for a gift not to be included on a PAYE settlement agreement or an employee’s payslip, you need a trivial benefit agreement with HMRC.
For those still interested in giving a cash bonus, many employees may not be aware that an increase in earnings will also mean an increase in earnings related deductions, such as student loans and court orders. So they won’t quite get all the bonus they may be expecting!
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.
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