How can you reward your staff this Christmas?

On top of every other inconvenience brought about by this dreadful virus, unless there is a sudden and dramatic change for the better coronavirus looks set to put paid to another tradition, the works Christmas Party.  That being so, employers may wish to look at alternatives for thanking their staff, especially in this of all years, for their hard work.  So, what can be done instead?

Employers may wish to consider a seasonal gift to their employees.  Following changes to the benefit-in-kind rules in 2016, ‘trivial’ gifts are exempt from tax and National Insurance, and a gift is deemed trivial providing:

• It is not cash or a cash voucher
• It doesn’t cost more than £50 for each employee
• It isn’t provided under a salary sacrifice or other arrangement
• It is not given in recognition of particular past or future services – in layman’s terms it is literally a gift, i.e. there is nothing given or expected in return.

It is worth noting that the ability to recognise employees in this fashion is not something new, or brought about by Covid-19; employers have always been able to thank their staff with a seasonal gift, and many have done so in addition to the annual party.  However, one imagines that this will become more popular in the current circumstances.

Where an employer is already in the habit of providing a gift, they could do so twice if they want to do something extra to replace the office party.  However it is important to be mindful that, although there is no limit on the number of trivial gifts that can be made to an individual employee during the year, HMRC will not accept an employer trying to divide a larger gift into smaller gifts that fit under the £50 limit.

Andrew Cowe, Tax manager, Brearley & Co