In a company your employees are your most valuable asset and it is important as an employer to make sure they feel appreciated for all that they do. There are many ways you can show appreciation to employees whether by monetary rewards, gifts or social events.  However, some of these shows of appreciation can end up having tax consequences to employees if seen as benefits in kind!

Below are a few examples of ways employers can show appreciation and what implications if any this can have for the employee:

Annual Parties- An employer can spend up to £150 per head on an annual function providing that all employees are invited to attend. The limit is inclusive of everything, food, drink, transport. This limit you could chose to split over multiple occasions. Be careful though, as if it works out just £1 over the limit then the whole amount becomes taxable.

Office Meals- Free meals can be provided to employees as long as on employer’s premises, so you can provide an office lunch. Just to be aware though working lunches do not have the same exemptions as this needs to be available to the whole workforce.

Long Service Awards- You can offer employees long service awards and they will be exempt of a benefit in kind as long as it marks twenty years of service and does not take the form of cash or cash vouchers as these will be seen as a benefit in kind.

Trivial Benefits– Employees can be given gifts from their employers that would not be considered a taxable benefit – birthday presents, Christmas gifts, birth gifts, wedding gifts and a gift that is not given for recognition of duties performed. Any cash/gifts/vouchers that are given in recognition of duties performed would be a taxable benefit.

Bonuses- You can pay your employees monetary incentives, but all of the cash/cash value payments would need to either be payrolled or added to a P11D in order for the tax to be paid on them by the employee.

There is a full manual of what employers can offer to employees and before making decisions on these I would make sure you check with the payroll provider or the HMRC guidance to be sure that the gifts/incentives you are offering is exempt for Tax and making sure that you are treating them correctly for Tax and P11D purposes.

The guide can be found at Tax on company benefits: Tax-free company benefits – GOV.UK (www.gov.uk)

If you need to know more, just reach out to your advo contact.