Tax on Staff Christmas Gifts
I’m looking at what to order for my employees for their Christmas presents. Is there any advice you have for me? I don’t want my employees to pay tax or National Insurance on their gifts- or the hassle of any extra admin!
If you buy your employees a seasonal gift such as a joint of meat 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. Since 6th April 2016, HM Revenue & Customs (HMRC) will accept a benefit is trivial if it satisfies these conditions:
1. the cost of providing the benefit does not exceed £50 (or the average cost per employee if a benefit is provided to a group of employees and it is impracticable to work out the exact cost per person);
2. the benefit is not cash or a cash voucher;
3. the employee is not entitled to the benefit as part of any contractual obligation (including under salary sacrifice arrangements); and
4. the benefit is not provided in recognition of particular services performed by the employee as part of their employment duties
For more generous gifts, 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.
Gifts and entertaining is a complex area, as it can have multitude of tax, National Insurance and VAT implications. Please feel free to contact Gary if you would like to discuss this further.
Amending a tax return
Whilst I was preparing this year’s tax return, I noticed I had made a mistake on last year’s return- and it has quite a significant impact on my tax position for last year. Can I change it?
If you make a mistake on your tax return, you've normally got 12 months from 31st January after the end of the tax year to correct or amend it. For example, if you send your 2014/15 online tax return by 31st January 2016, you have until 31st January 2017 to amend it. You can only amend your return after this timeframe if you received your return late (after 31st July).
If you owe more tax or have to pay a penalty as a result of the mistake, HMRC should tell you how much you need to pay and when and how to pay it. If you think you're due a refund you can tell HMRC how you’d like to receive it.
If you sent your tax return electronically, you can also amend it online. If you send it in hard-copy, you don't need to send in the whole tax return again. Just write to HMRC and attached the pages you want to change.
If preparing your tax return is becoming a burden, please feel free to contact us. Your local TaxAssist Accountant, Gary Perrens, would be happy to prepare your return for you. This should ensure your return is accurate and prepared in good time; and he will also look for any tax saving opportunities.
How to pay your tax bill
I have a full-time job and in my spare time, I also have a craft business which I look after at weekends and evenings. Finding the money for my tax bill every January is always a bit of a struggle- especially after Christmas. Is there anything I can do to make my tax bill a bit more manageable?
Yes, you have 2 main options:
Collected from your wages
You could opt to have it collected from your wages through your tax code. HM Revenue and Customs (HMRC) can now collect debts of up to £3,000 by adjusting your Pay As You Earn (PAYE) tax code. The effect of this is to recover the debt from your income, by increasing the amount that your employer deducts from your wages during the tax year. Your employer will then pay the tax they collect to HM Revenue & Customs on your behalf.
Taxpayers wishing to have their tax bills coded out should tick the appropriate box on their tax return and submit it by 31st October if filing on paper or 30 December if filing online.
Or you could set up a Budget Payment Plan for Self Assessment. Budget Payment Plans are available to Self Assessment customers who pay by online Direct Debit and are up to date to with their payments.
If you haven't paid the full amount you owe by 31st January 2017 through your Budget Payment Plan, then you will need to make another payment to cover the difference.
If you'd like assistance in managing your cashflow or tax affairs, get in contact
Tax Credits Actual figures
When I submitted my Tax Credits renewal forms, I had to estimate my self-employment income because I had not drawn my accounts up. I have now completed my accounts and I am about to file my tax return. Will the Tax Credits office be informed of the actual figures on my tax return?
Sadly not I am afraid. You will have to give the Tax Credits Office a call to inform them of your actual figures and you must do so by 31st January.
If you fail to meet the January deadline, your tax credits won’t stop but the tax credits you receive from 6th April may not be accurate. And if you’re overpaid, you may have to pay it back later- and you may even be charged a penalty.
Member since: 17th March 2014
Hello! I'm Penny from thebestof Sudbury, shouting about the best local businesses from Hadleigh through the Clare. When I'm not doing that, you'll find me knitting socks or tending to my 6 chickens