Sponsoring an Employee

Sponsoring an Employee

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Our clients wish to make a payment of £500 to one of their employees to assist with the cost of travelling to, and competing in, the Deaf Games. They have asked whether they must apply PAYE and Class 1 NIC to this payment.

Clearly I would like to respond in the negative. The only way I can see of doing this is to convince HMRC that the payment is ex gratia. However, HMRC guidance (NIM2140) is that, following the decision in Hamblett v Godfrey "...........it is likely that very few payments referred to as "ex gratia" will not be liable.............."

The employer has made other sponsorship payments and awards to non employees in the past, albeit for lower amounts. Therefore there may be an argument that the payment has not been made because the person is an employee, but because this is the sort of thing that this company does from time to time.

Any thoughts would be greatly appreciated.

Jansky.
Jansky

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