This month, Gary Perrens, from TaxAssist Accountants in Sudbury, answers questions about tax on staff Christmas gifts, amending a tax return & ways to pay your tax bill
Tax on Staff 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 don’t want my employees to pay tax or National Insurance on their gifts- or the hassle of any extra admin!
A: 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.
However, if your gifts are more lavish than the examples above- say a hamper, case of wine or vouchers - 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.
Gifts and entertaining is a complex area, as it can have multitude of tax, National Insurance and VAT implications. Please feel free to contact your local TaxAssist Accountant if you would like to discuss this further.
VAT on staff Christmas presents
Q: I’ve just purchased a bulk load of chocolates and bottles of wine for staff Christmas presents. Can I reclaim the VAT on them?
A: If you give away goods and are entitled to recover VAT on them, you must account for VAT on their cost value. So I’m afraid this means the VAT position is neutral.
However, you do not have to account for VAT on ‘business gifts’ made to the same person so long as the total cost of all the gifts does not exceed £50 (excluding VAT) in any 12-month period. A ‘business gift’ is simply a gift of goods that is made in the course of your business.
Gifts and entertaining is a complex area, as it can have a multitude of tax, National Insurance and VAT implications. Please feel free to contact your local TaxAssist Accountant if you would like to discuss this further
Amending a tax return
Q: 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?
A: 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 2013/14 online tax return by 31st January 2015, you have until 31st January 2016 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're 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 hardcopy, 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 would be happy to prepare your return for you. This should ensure your return is accurate and prepared in good time; and your TaxAssist Accountant will also look for any tax saving opportunities.
Q: 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?
A: 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 £17,000 by adjusting your Pay As You Earn (PAYE) tax code. HMRC refers to this as ‘coding out’. The effect of this is to recover the debt from your income, by increasing the amount that we deduct from your income during the tax year.
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 through your Budget Payment Plan then you will need to make another payment to cover the difference. You can do this by setting up another Direct Debit and your payment must reach HMRC by the due date.
If you'd like assistance in managing your tax affairs, please contact Gary on 01787 699 141 or email firstname.lastname@example.org
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