Now that the Christmas party season is upon us, here is a summary on what is a taxable deduction 🌟

The cost of the function must be less than £150 including VAT per head.

🛑 Be careful, if the cost of providing the party (room hire/food/travel) exceeds that amount, the whole amount is taxable!

If you have more than one party over the year, the amount per head is combined, which may lead to one event being fully taxable.

To get the tax relief;

👉 All staff are invited;

👉 No relief for director only parties excluding employees unless the only employees are the directors;

👉 You can invite other guests but the main purpose is for staff entertainment.

You can claim VAT where the purpose of the event is for staff welfare.

Note! HMRC may decide to block any claims where they think it is client entertaining and there can be penalties imposed where they believe you have been careless and tax should be due.

A little known and underused tax free perk is the trivial benefits exemption.

A benefit provided to an employee is classed as a trivial benefit and therefore tax free for not only them, but a tax deduction for the employer too, provided that;

✔️ It is less than £50, if given as a voucher it is non-cash transferable,
✔️ It is NOT a reward for services,
✔️ And, it isn't included in the terms of an employee’s contract.

Examples 👀

Trivial benefits could include, a gift voucher, a bunch of flowers, taking a group of employees out for a meal to celebrate a birthday (as long as it doesn’t exceed £50 incl VAT per head).

To avoid the reward for service rule, the benefits could be given for a birthday, or a turkey or bottle of wine at Christmas, the birth of a child or a bereavement.

There is no limit to employees! 😲

HMRC’s legislation does not state how many times per year you can give a trivial benefit to your employees. But be wise! Obviously a £50 gift every working day of the year would ring HMRC's alarm bells so we would advise that any trivial benefits made in the year are made as a gesture rather than a frequent payment.

An does this apply to company directors too? 👀

Yes it does! To limit company directors taking advantage of this tax freebie, HMRC will allow trivial benefits provided to directors up to a value of £300 per year. So that’s a payment up to £50 once every two months. If your spouse is also a director that is another saving of £300 from your tax bills. 💰

You’ll need to declare and pay Tax & NI on anything above e.g. £51 will mean the full amount not deductible and is reportable through P11D/PSA or payroll as benefits.

#recruitmentbusiness #recruiters #recruitmentdirectors #taxfreeperks #recruitmentaccountants #trivialbenefits #taxsavings #hasslefreeaccountancy

Please note, all our content is for general guideline only, every case is different and we would recommend speaking to us before taking any action as a result of the content. The content was correct at the time it was published.

The cost of eye tests for directors and employees is deemed an allowable business expense, reducing your corporation tax, where you and your team use screens for more than an hour per day on a regular basis. For employees, it is up to them to make the booking and provide the receipt in order to claim back the expense amount.

When it comes to the cost of glasses and contact lenses, if you & your employees are required to use them in everyday life then it is difficult to prove that they are a business expense. In exceptional circumstances only, the cost or part of the cost may be claimed.

Otherwise if the company chooses to pay for the glasses and contact lenses, then the cost will be deemed as a benefit in kind and taxes & NI will apply.

#companyeyetest #recruiter #recruitment #recruitmentbusiness #recruitmentdirector #accountantforrecruiters #coopercurtis

Please note, all our content is for general guideline only, every case is different and we would recommend speaking to us before taking any action as a result of the content. The content was correct at the time it was published.

Did you know you can get an annual health-screening assessment paid for by the company? 📝

You and your employees can each qualify for one health screening and then afterwards (if required by a medical practitioner) one medical check-up per year, paid for tax-free by your limited company.

#taxfreebenefits #perks #recruiters #recruitment #recruitmentbusiness

Please note, all our content is for general guideline only, every case is different and we would recommend speaking to us before taking any action as a result of the content. The content was correct at the time it was published.

📍 Tax advantages for Employing your spouse💘📍

Clearly, you know the person well, and therefore all the concerns about trust (should) go out the window.

From a financial point-of-view, there are certain benefits that you can achieve through employing a spouse. Let’s take a look at some of them now;

💭Use up your Tax Allowance!

Almost everyone living in the UK is entitled to an Income Tax Allowance; “the amount of income you can receive each year, without having to pay tax on it”. For the majority of the working public, this figure currently stands at £12,570 (2021/22).

By employing a spouse, you can make sure that your partner is using up all of this non-taxable income. If they do a job for free, pay them! After-all, its money going into your household – that isn’t getting taxed. Just think; how much would it cost to employ a non-family member to do the same job?

💭 Higher Rate Business – Split your profits

On a similar note; directors of a business which pays a higher rate of tax can also benefit from taking on a spouse, by making them “more than just an employee.”

If your spouse were to become a shareholder in the company, for example, you can pay yourselves a mixture of salary & dividends, and make use of the £2,000 dividend tax free band (2021/22), thereby reducing your overall tax bills quite considerably. Not only this, but once again, more money going into your household.

📢However, becoming a shareholder of a company can mean other rights are attached to this, so we would recommend you seek legal advice first before giving away shares.

💭Save on National Insurance costs

If you are a 'director only business' with no other employees and you pay an additional employee or spouse £8,840, the employment allowance can be claimed through the payroll at a total of £4,000 for the tax year, giving relief on Employers NI.

💭Don’t get caught out!

It is important that your spouse is treated like a “normal” employee. Just because you are in a personal relationship with them, it doesn’t mean you can exploit them for your own gain.

The National Minimum Wage rules therefore still apply, and your spouse must actually be paid what they are owed (and are thus affordable to you). Just like with a normal employee, if your spouse is not involved in any other paid employment the normal new employee process must be followed.

To avoid any unwelcome visits/checks from HMRC; make sure that your spouse is employed to do a “proper” job within your organisation.

💭Employing a spouse could be a good tax saving idea

All in all, employing a spouse can often be a worthwhile venture for your business. There are many tax benefits (some listed above), that can be realised from doing so but it is essential that if you are thinking about taking on your husband/wife as an employee of your company that you do things by-the-book.

Please note, all our content is for general guideline only, every case is different and we would recommend speaking to us before taking any action as a result of the content. The content was correct at the time it was published. 

📍 Tax advantages for Employing your spouse💘📍

Clearly, you know the person well, and therefore all the concerns about trust (should) go out the window.

From a financial point-of-view, there are certain benefits that you can achieve through employing a spouse. Let’s take a look at some of them now;

💭Use up your Tax Allowance!

Almost everyone living in the UK is entitled to an Income Tax Allowance; “the amount of income you can receive each year, without having to pay tax on it”. For the majority of the working public, this figure currently stands at £12,570 (2021/22).

By employing a spouse, you can make sure that your partner is using up all of this non-taxable income. If they do a job for free, pay them! After-all, its money going into your household – that isn’t getting taxed. Just think; how much would it cost to employ a non-family member to do the same job?

💭 Higher Rate Business – Split your profits

On a similar note; directors of a business which pays a higher rate of tax can also benefit from taking on a spouse, by making them “more than just an employee.”

If your spouse were to become a shareholder in the company, for example, you can pay yourselves a mixture of salary & dividends, and make use of the £2,000 dividend tax free band (2021/22), thereby reducing your overall tax bills quite considerably. Not only this, but once again, more money going into your household.

📢However, becoming a shareholder of a company can mean other rights are attached to this, so we would recommend you seek legal advice first before giving away shares.

💭Save on National Insurance costs

If you are a 'director only business' with no other employees and you pay an additional employee or spouse £8,840, the employment allowance can be claimed through the payroll at a total of £4,000 for the tax year, giving relief on Employers NI.

💭Don’t get caught out!

It is important that your spouse is treated like a “normal” employee. Just because you are in a personal relationship with them, it doesn’t mean you can exploit them for your own gain.

The National Minimum Wage rules therefore still apply, and your spouse must actually be paid what they are owed (and are thus affordable to you). Just like with a normal employee, if your spouse is not involved in any other paid employment the normal new employee process must be followed.

To avoid any unwelcome visits/checks from HMRC; make sure that your spouse is employed to do a “proper” job within your organisation.

💭Employing a spouse could be a good tax saving idea

All in all, employing a spouse can often be a worthwhile venture for your business. There are many tax benefits (some listed above), that can be realised from doing so but it is essential that if you are thinking about taking on your husband/wife as an employee of your company that you do things by-the-book.

Please note, all our content is for general guideline only, every case is different and we would recommend speaking to us before taking any action as a result of the content. The content was correct at the time it was published.