Chartered accountants have advised companies to try and avoid giving their employees extra tax this Christmas. So how can commercial property businesses avoid stinging their own employees?
To avoid employees becoming a victim of extra tax, companies wishing to put on a Christmas party for their employees must invite all members of staff, and it must cost less than £150 per head. If the Christmas party is not open to all employees regardless of their position or costs more than £150 per head, the employees will be charged tax on the cost of the event.
The party is taxable because it is seen as a ‘benefit in kind’. The Citizens Advice Bureau (CAB) defines a ‘Benefit in kind’ as: “Benefits which employees or directors receive from their employment but which are not included in their salary cheque or wages. They are sometimes called ‘perks’ or ‘fringe benefits’. They include things like company cars, private medical insurance paid for by the employer and cheap or free loans. Some benefits in kind will not be taxed. Some benefits in kind will be taxed only for people who are not in lower paid employment. Some benefits in kind will be taxed for everyone, whatever their income.”
Also if employees agree to attend the party and then do not show up, could cause other employees to be taxed, as Brian Gooch, Tax Manager at Hawsons, based in Sheffield, expressed: “This means that if several people fail to show up having accepted an invitation it could conceivably trigger a tax liability all round.”
So, before agreeing to attend an all expenses paid Christmas party this month, courtesy of your boss, you may want to check how much they are spending and whether everyone in the company is actually invited. Failure to do so could come as a shock on your next wage slip.
