Christmas is coming, the goose is at its max, but what's your obligation for NI and tax?
If you're an employer providing a staff Christmas party or an annual function for your employees, you have certain National Insurance and reporting obligations. In this article, we look at how to make sure you comply this festive season and help you banish tax worries along with the ghost of Christmas past.
The office Christmas party has its clichés - co-worker clinches in the stationery cupboard and inappropriate use of the office photocopier - and some staff may even consider they're entitled to party on corporate expenses this festive season. But actually, work parties are a great way to demonstrate appreciation and can play a large part in the retention of staff. This is particularly important for staff who may work in the background, behind the scenes.
From an employee's perspective, a Christmas party is a thank you for their hard work and dedication throughout the year, and a way to raise motivation for the coming year. It's a morale boost that can unite disparate workforces and strengthen teams. If you choose not to host a seasonal event, or mark it in some way for your employees, you could end up being cast as Ebenezer in your very own Christmas Carol.
Reporting for tax to HMRC
What you need to report and pay in terms of tax and NI depends on a number of parameters.
- Is it an annual event open to all of your employees?
- Will it cost more than £150 per person?
- Is it the only event you've held in the tax year?
- Is your employee a director?
- How much do they earn?
- Is it part of a salary sacrifice arrangement?
- The general meaning of “annual” in the context of HMRC's rules is that it is something that happens once a year on a recurring basis. The cost per head includes VAT and transport and/or overnight accommodation costs, if these are provided to enable employees to attend.
A bit of a minefield -- but's to get it right and there should be no tax to pay.
You might not have to report anything to HM Revenue and Customs (HMRC) or pay tax and National Insurance, if the party or social function meets certain exemptions based on accessibility, cost per head and other factors.
You can find out more information about the rules here.
If reporting on your festive party is chipping away at your Christmas cheer, don't worry - get in touch with us today and we'll wrap it up for you in no time at all.
Now that's a Christmas present we'd all love to receive!
Happy Christmas from everybody at Kendall Richardson