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News - 17 December 2014

Tax shock at Christmas parties

Notice to ALL EMPLOYERS, says Stuart Coleman, Manager of the Tax Department of ABDS:
“The £150 per head, per year allowance that employers are allowed to spend on entertaining staff, has not changed since June 2003.”

This may not be a problem, but firms should monitor spending, especially at this time of the year, because entertaining staff is considered by HM Revenue and Customs (HMRC) as a benefit in kind which is taxable. So after the £150 allowance, a tax bill could be levied on individual employees.

One way around this, however, is that firms could enter a settlement agreement that would ensure employers covered the cost, rather than employees.

How?

Companies could bear the tax on parties and celebrations therefore removing the taxable benefit on individuals.

Oh, and don’t forget VAT. The VAT laws are complicated to say the least, and are generally levied on "luxuries", but many "essentials" are VAT-free.

An example of this would be Nuts. HMRC considers shelled and salted nuts to be luxuries and are subject to VAT, but unshelled nuts are free from VAT.

If you need any help and advice with VAT or other tax matters, contact Lavinia Newman Stuart Coleman or Liz Kennett now to discuss how ABDS can help bring their experience to these matters.

ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900  E-mail: abds@netaccountants.net

Brilliant with numbers   
Great with people  
Clear and precise with advice
Timely and cost effective 
In touch with issues that face our clients and
mindful of their long term strategic goals

Helping Your Business is Our Business
 

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