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Avoid being the expenses Scrooge this Christmas

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20th Dec 2016
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Bernard Crumlish, management accountant and finance manager at webexpenses, runs through his top tips to avoid being the expenses Scrooge this festive season.

For many Christmas is the most wonderful time of the year, but for finance directors and CFOs it can also be the most stressful time. Many employees get carried away during the festive season, and an area which results in problems for finance teams is around the expense process. With continuous spending, employees may push the boundaries and break the expenses guidelines, creating an accounting headache for the finance teams.

It’s not an enjoyable task to monitor and query expenses, particularly this time of year. However, there are some simple steps FDs and CFOs can follow this Christmas season to avoid being the office Scrooge:

Be prepared

Hopefully you’ve worked out your budget for Christmas, including any major or minor costs you might incur such as parties, decorations, client entertainment, gifts for employees and customers and transport.

With disruption anticipated at the end of the month, an early payroll, payment and expense run could all alleviate month-end admin, and are often much appreciated by suppliers and employees. However, they require forward planning. 

From a cash flow perspective it can be a peak time. A lot of businesses are looking to tie up any loose ends, and it's likely that a greater volume of payments will be made in a short space of time.

Remind yourself of the tax rules with gifts

As part of the planning ahead process, ensure you have a budget set aside for gifts at Christmas as well as a strong understanding of the HMRC rules.

HMRC allows businesses to buy ‘trivial’ presents for employees without tax implications. However, these cannot be cash or vouchers. A box of chocolates or bottle of wine would be considered a trivial gift. On the other hand, if you’re sending a Christmas hamper this is less likely to be considered trivial and should appear on an employee’s P11D or paid for on behalf of the employee via the employers’ PAYE settlement agreement.

Be sensible with the Christmas party

Although it is a great opportunity to bring employees together, there are tax restrictions accountants must keep track of. HMRC rules allow for a business to spend £150 a year per person, tax free, on entertaining employees without a restriction on the business.

However, should the business exceed the limit of £150 the overall cost of the event becomes taxable as a benefit in kind and has to therefore be reported on each employee’s P11D or paid on behalf of the employee via the employers’ PAYE settlement agreement. So make sure you take care and report everything you need to.   

Keep a record of all spending

Depending on what works best for your company, ensure you have a procedure or system in place to keep track of your budget. Finance teams need sight of exactly what is being spent where and by whom in order to ensure budgets are being adhered to.

Expenses management tools have been created to enable a real-time overview of incomings and outgoings – saving finance teams huge amounts of time and potentially money.

Using the above tips will help to reduce stress and inefficiencies in the expense management process this Christmas season and in turn help accountants to lose their scrooge hat and enjoy the festivities.

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