Planning to treat your staff to a little something this Christmas? It’s great to be generous, reward hard work and earn yourself a little goodwill in the process. But there are some things you should bear in mind as a business owner to make sure you don’t unwittingly act unlawfully, or incur unexpected tax liabilities.
Here are five considerations you may want to take into account when deciding on the best way to reward your team this upcoming festive season.
Maternity leave and Christmas bonuses
If you pay a discretionary one-off Christmas bonus to all staff of a fixed amount, or a week’s pay or similar, this must be paid to women on maternity leave (and staff on other family leaves) in exactly the same amount as everyone else gets.
Where a bonus is performance-related and is part of normal remuneration, this can be pro-rated to reflect maternity leave, but discretionary one-off sums like Christmas bonuses must be paid in full.
Be fair to all
Avoid accusations of discrimination, unfairness or favouritism by getting everyone the same gift, if you are doing gifts. People will compare, and if everyone gets exactly the same, there’s no complaint to be made.
Consider giving group gifts such as chocolates, other food items or things which can be shared, although you need to be careful that these items are suitable for everyone and should take into account dietary restrictions particularly for those of religions where this may be a factor.
Unless a gift is defined as “trivial” under HMRC rules, it will be a taxable benefit. A trivial benefit is something which costs you £50 or less to provide, isn’t cash or a cash voucher, isn’t a reward for their work or performance, and isn’t in the terms of their contract. To avoid being taxable, a gift you give your staff needs to meet all those criteria.
Vouchers and cash bonuses
Although vouchers are often a welcome option, as employees can choose their own gift, that means there will be a tax implication. You can pay the tax on your employees’ behalf, but it will need declaring on P11D forms anyway, and you may decide the administrative burden alone is a reason to choose something else.
Any cash bonus is also obviously then taxable, although there is less of an administrative burden as it will just go through your PAYE system as normal wages do.
Paying for Christmas Party
Paying for social events for staff can sometimes be taxable, however Christmas celebrations, as an annual event, can be exempt from this if the cost is £150 or less per head and the event is open to all your employees.
If you’re unsure of the implications of a gift you are considering, or want some advice about fairness in relation to Christmas rewards, do get in touch.