It’s that time of the year when we celebrate the spirit of giving. As the festive season approaches, you may be considering ways to give back to your employees. This could be in the form of a Christmas bonus, a fun party, and maybe a few gifts.
But as you know by now gifting to an employee will have a taxable consequence. A bonus will need to be put through the payroll; the party will only be exempt if the cost per head is less than £150.
If not, you could always do PAYE Settlement Agreement because that way the employee is not picking up any of the tax bill.
The £150 rule for the party is not just for Christmas so be careful when you do the sums. Here’s some more guidance to help you.
But what more can you do. How else can you reward your team at this or any other time of the year?
Tax-free benefits for your employees
You can use the rules of trivial benefits and provide gifts that are not cash.
Done correctly this set of rules allows you to acknowledge your employees at Christmas without incurring any tax liability. Consider the trivial benefits exemption as a gift from the tax man.
You can use the trivial benefits exemption at any point in the year, such as for birthdays, weddings, and other occasions. However, it’s important to note that consistently providing gifts can create an expectation and violate the rule. Therefore, it’s recommended to be spontaneous.
Other ways of helping your employees
The last few years have led many employers to rethink how they can help their employees. The better employers of course help their staff throughout the year and not just at Christmas.
So how can you do that? What easy steps can you take as an employer? Well, we’ve got a few suggestions some of which we have implemented ourselves in-house.
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Food at work
Since Covid, we have been providing food at the office. Now don’t get us wrong we’re not talking a full cooked meal or anything like that which would require a sizeable investment.
No, we are talking about simple breakfast cereals, yogurts, bread to make toast, spreads, cans of soups, frozen jacket potatoes, and some simple fillings like cheese and baked beans.
Money spent on food for your employees is not taxable and does not attract National Insurance (NIC) when provided to all employees.
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Employee Assisted Programme (EAP)
Again we have been providing this to all our employees for a few years now.
For a monthly subscription, your employees can enjoy a range of benefits such as subsidised gym membership, reimbursement of costs spent on dentist and optician appointments, access to counselling services for mental health and debt management, and even legal assistance.
Again, if this benefit is offered to all employees there is no tax or NIC.
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Interest-Free Loans
If you currently offer loans for season tickets, you could consider expanding your loan provision to support employees who are facing temporary financial difficulties. However, it’s crucial to have an open dialogue with the employee in question to ensure that they can comfortably repay the loan through payroll deductions each month.
Loans up to £10,000 do not attract tax or NIC
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Employee Suggestion Scheme
These programs aim to boost employee engagement by incentivising them to share their innovative ideas with the company, with the chance to receive a gift voucher as a reward if their idea is chosen.
The scheme must be open to everyone, and the value must not exceed £25. The scheme must also just relate to your business, and it is not part of the employee’s normal role.
There is no tax and NIC if these simple rules are followed but you must document the ideas as well who the winners are each month.
There is also the financial benefits awards whereby any awards up to £5,000 can be e exempt but this is a bit harder to implement.
The last couple of years have been hard for some people. The cost-of-living crisis with soaring prices of goods and services has led to most people having to tighten their purses. So, there will be a way that you can make a small difference to your team.
You just need to think a bit more creatively. Christmas parties are almost always good fun, but would your employees appreciate something else instead? Many of the ideas here a simple to implement and do not need to cost you the earth, but it may make a genuine difference to some of your staff.
Think about what your employees would appreciate when giving back during Christmas, just like you do with your loved ones.
If you need assistance with staff rewards via payroll, benefits, or other means, please contact our Head of Payroll. You can email Priya at priyar@myersclark.co.uk.