Forfeit Tax Relief

Forfeit Tax Relief

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Several small clients want to buy Christmas gifts for their employees - but will obviously be blighted by either P11D or PSA. For the amounts involved, the paperwork is crap. If the employer forfeited tax relief on the gift, would this remove the need to report under P11D/PSA?

Thanks for any comments or answers.

RR

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By User deleted
22nd Nov 2006 13:38

Thanks Neil
Thank you, I was aware of option 2, which I found when doing an AccWeb search.

The trivial option is relevant as the tax and NI on gifts for one particular employer is less than £10.

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By neiltonks
22nd Nov 2006 13:23

Two possibilities
There are two possibilities:

1) Convince the tax inspector that the benefit is "trivial" in nature and therefore need not be declared on the P11D. There's no definitive statement on what constitutes 'trivial' but it can cover Christmas gifts. HMRC quote as examples (not as an exhaustive list):
Turkey
Bottle of wine
Box of chocolates.

For further details see HMRC manual section EIM21863 and the various other sections linked from there.

http://www.hmrc.gov.uk/manuals/eimanual/EIM21863.htm

2) Throw a party or other function rather than giving out gifts. Provided the total cost (including any extras such as paying for taxis) doesn't exceed an average of £150 per person, no benefit arises. The party can include employees' spouses/partners and they get the £150 allowance too.

To work out the average cost divide the total cost of the event by the total number of attendees (not the number of employees).

For further details see EIM21690 http://www.hmrc.gov.uk/manuals/eimanual/eim21690.htm

Neil.

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