Tax Free Staff Chirstmas Parties

Christmas is an expensive time, but staff parties are potentially tax-free. HMRC’s festive gift is limited though, as companies are allowed an annual tax-free amount of up to £150 per member of staff. This total not only covers food and drink, but also accommodation an...d transport home if the employer pays for these. The number of guests can also include non-employees such as partners. On top of this, the employer will also get tax relief on what it all costs. As many firms are planning a frugal Christmas party this year, more staff parties could end up being tax-free. The rules apply to any annual party or similar function, which must be open to staff generally or to workers at a particular location. The tax-free limit applies for a tax year, so if the employer puts on a summer party and a Christmas dinner together costing less than £150 a head, both will be tax-free for employees. The gift from HMRC is available to businesses of all sizes. But one penny over this limit and the full amount spent will become liable to income tax and National Insurance (NI) for both staff and employer alike. It is taxed as a benefit which could bring a nasty chill in the New Year Anita Monteith of the ICAEW Tax Faculty, explains: “Businesses should make the most of the tax free amount and not just resort to putting up some cheap tinsel in the office and offering plates of pretzels and soft drinks.” “It has been a tough time for many businesses and staff are probably in need of having their spirits raised. Having a Christmas party is a real morale-booster and rewards the hard work that staff put in over the year. It is a good way for businesses to show appreciation for their employees’ contributions and encourages their commitment and ongoing efforts.” For those bosses who are truly entering the festive spirit, they should remember that gifts for employees will be taxable. Cash presents, such as Christmas bonuses or vouchers redeemable for cash will have to have tax and National Insurance (NI) contributions paid through the PAYE system. But bosses who prefer to give staff a poinsettia or high street gift voucher can pick up the tax bill on behalf of their employees by setting up a PAYE Settlement Agreement (PSA) with their tax office

Small Business

Whilst researching the net I’ve come across some interesting starchiest on small business in the UK. These stats taken from the federation of small business the website is www.fbs.org.uk . Here are a few I found the most interesting.
• There are 4.8 million small businesses in the UK (up from 4 million in 2003)
• 3 million businesses are sole proprietors
• 5 per cent employ less than 5 people
• Over 500,000 people start up their own business every year
• 33 per cent of all UK enterprises are in London and the South-East
• Small and medium-sized firms employ more than 59.4 per cent of the private sector workforce

Pre Budget Report

Most of you are probably aware of the things announced in the pre-budget report. But for those that aren’t, here's some of the key points that will affect small businesses.
1. VAT will return to 17.5% on January 1st
2. Employer, employee, and self- employed rates of NI to increase by 0.5% from April 2011.
3. Starting point from which NI in payable to be raised to £20,000.
4. Enterprise finance guarantee scheme to be extended for a further 12 months.
5. Increase in corporation tax far smaller compares to be deferred.
For full details please visit www.thetelegraph.co.uk