Although it is hard to believe, the festive season is nearly upon us and it is time to think about making sure that all of your necessary filing duties as a business owner are completed in a timely manner so that you can take a well-earned break over the Christmas period. You might also be thinking about possible gifts or bonuses for employees or perhaps a Christmas party which all bring with them questions on what you have to report to HMRC. Just Simply Organised will cover some of the questions that arise to ensure accurate payroll and bookkeeping at this time of year and avoiding some expensive mistakes.
Important Dates to Note for Just Simply Organised Clients:
Our offices will be closed for our annual Christmas break from 12 noon on Friday 22nd December 2023, re-opening on Tuesday 2nd January 2024 at 9 am.
Thursday 7th December – we will start payroll processing for those which stay the same each month from this date, so please let us know if there are any changes for your December payroll before 7th.
Friday 8th December – all VAT work due in by this date*
Monday 11th December – all CIS work due in by this date*
Wednesday 20th December – last date for receipt of your December payroll information unless you have pre-booked for Thursday 21st or Friday 22nd December**.
*These dates are the latest for receipt of your VAT and CIS work, so please do send before if you are able to.
**We do ask that you book in your payroll during November if you would like it to be processed on 20th, 21st or 22nd December.
Can I give my employees a bonus to thank them for their hard work this year?
Giving a bonus to your hard-working team is always welcomed, but do be aware that any financial bonus or gift to your employees must be processed through your payroll. This is income and, as such, is subject to the usual deductions, so make sure that you advise your payroll provider in plenty of time so that this can be processed in the correct payroll period.
It’s December and an expensive time of year, should I pay my employees before Christmas or on their usual pay date?
With online banking allowing you to set up payments in advance, you do not have to be at your desk on the usual payroll date in order to pay your employees. Some employers like to pay their employees early before they finish for the Christmas break and this can be very welcome …. until the middle of January when payday seems a long way off!
There are mixed views on this and it is worth considering how you have handled this in the past. Employees could be expecting an early pay date if this has been your usual practice, but likewise some may struggle financially in the long month of January.
HMRC allows for the usual pay date to be retained in your payroll submissions, even if you decide to pay early in December. Otherwise, this can affect your employees’ benefit-related payments, such as Universal Credit.
Just Simply Organised can now set up the payments for your employees’ salaries and your suppliers through the Modulr payment platform. Contact us at info@justsimplyorganised.co.uk 01892 770612 for more information.
Can I give my employees a gift instead?
You can give your employees ad-hoc gifts which cost less than £50 under the trivial benefits rule with no tax being payable. To count as a trivial benefit, the gift has to fulfil all four of the following criteria:
- It cost you £50 or less to provide
- It is not cash or a cash voucher
- It is not a reward for their work or performance
- It is not in the terms of your contracts
Other gifts or rewards that do not meet all of these criteria will count as a benefit and you will need to report on a P11D form at the end of the year and pay any Class 1A NI that becomes due.
The important point to note is that trivial benefits should be one-off, random acts not a regular or expected gift or reward. So do remember, that Christmas hamper should not be accompanied by a card which says “Congratulations on meeting all of your targets this year”!
Check out the link below and do contact HMRC if you are unsure:
https://www.gov.uk/expenses-and-benefits-trivial-benefits
Can I claim the Christmas party as a business expense and recover the VAT?
Treating employees and their partners, as well as maybe your clients and sub-contractors to a Christmas party is another way of saying “thank you” to them all.
If you are a Limited company, for your employees, as long as the event fulfils all of the criteria below, you do not have to report anything to HMRC:
- It must be open to all of your employees
- It must be annual, such as a Christmas party or summer barbecue
- It must cost £150 or less per person
You could hold two or more annual events each year and, as long as the combined cost per head is £150 or less, it will still be exempt from reporting. As with trivial benefits above, if your event does not meet these criteria, you will need to report the expense on a P11D form for each employee and Class 1A NI will then become payable. Calculating the cost per head can include travel and overnight hotel accommodation if necessary for attending the event.
Do note that this is an exemption, not an allowance, so if you go over the exempt amount of £150 per head, even by £1, then the whole amount becomes reportable and taxable. The good news is that you can also use the exemption for a family member or partner of your employee.
Be aware that you can only claim VAT back on the cost of entertaining your employees. You cannot claim VAT for entertaining family members or partners of employees, or for entertaining clients, former employees, shareholders (who are not also employees) or suppliers. It is also not possible to claim any employee entertaining costs if HMRC believe that the cost was incurred at an event that was aimed at entertaining customers or marketing your business, as opposed to specifically being a function for your employees, so be wary of one function covering all.
As you can see, it is not a simple case of “let’s have a Christmas celebration to thank all of our employees, their families, our customers and our wider business community for their support this year”. The Just Simply Organised bookkeeping team will ask you to confirm the status of all attendees at your event and then make sure that all of your responsibilities for tax and NI are correctly covered.
Hopefully that has wrapped up your Christmas gifts and parties for you! Do remember that the Just Simply Organised team are here to help with all of your bookkeeping and payroll questions throughout the year. Contact us at info@justsimplyorganised.co.uk 01892 770612.
All content provided in this blog is for information purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site.
