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Christmas Gifts and Parties

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It’s Christmas time again and some employers may be providing their staff with a Christmas bonus, a seasonal gift or a Christmas party.

If a gift is given, you need to consider whether the item can be resold or exchanged for cash by the employee or if it is considered as trivial and therefore tax exempt. There are no set rules for determining which Christmas benefits are trivial, but a value of up to £50.00 is usually considered appropriate. Christmas gifts such as a turkey, bottle of wine or a box of chocolates can be treated as trivial benefits. Cash benefits, benefits with a money’s worth and non-cash vouchers, such as shopping vouchers are not regarded as trivial by HMRC. Cash bonuses count as earnings and are added to the normal employee earnings for tax and National Insurance.

Small third party gifts may also be tax exempt if they are not provided by the employer; it is not in recognition of the service performed by the employee; it is not cash or vouchers that can be converted to cash, and it is does not exceed £250.00.

There are exemptions for employers providing parties for employees as long as they are an annual event; it is open to all employees and the cost per head is not more than £150.00.

2015 National Minimum Wage Rates

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From 1st October 2015 National Minimum Wage rates have increased, so please ensure you are paying your employees correctly. Research suggests nearly a third of small business owners do not know what the National Minimum Wage rate is or forget that it increases every October.

Adults aged 21 and over increases from £6.50 to £6.70 an hour
18 to 20 year olds increase from £5.13 to £5.30 an hour
16 to 17 year olds increase from £3.79 to £3.87 an hour
The apprentice rate for increases from £2.73 to £3.30 an hour

Companies failing to comply with the National Minimum Wage risk being named and shamed, and could be fined up to £20,000 per worker if prosecuted.
You also need to be aware that from April 2016 a new minimum limit called the National Living Wage will come into force for all workers aged 25 and over which is set to begin at £7.20 an hour. This means that employers who pay at the minimum wage will be hit twice in one year. It is predicted that around 6 million people will benefit from the 2016 introduction.

Auto Enrolment: What if no staff are eligible?

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Many small employers may have employees that are not eligible for automatic enrolment and therefore assume that they do not need to set up a pension. Whilst there is no need to set up a pension if you have staff that are not eligible because they are too young or do not earn enough, those employees can still ask to go into a pension scheme. If this happens, you will need to set one up at this point. If your member earns more than £112 a week or £486 a month, you must make contributions to the scheme as well. If they earn less than this, you can choose whether you want to contribute or not. What if no staff are eligible? Even if you don’t have any staff to automatically enrol, you will still need to complete the following tasks:

* You must write to all your staff to let them know they have not been automatically enrolled but can ask to go into a pension scheme. For more information go to write to your staff

* You must complete your declaration of compliance to let The Pensions Regulator know that you have met your legal duties. For more information go to declaration of compliance

You must check the ages and earnings of your staff aged between 22 and state pension age every time you run your payroll to see if anyone who wasn’t eligible for automatic enrolment at your staging date has since become eligible. You must enrol and write to them within six weeks from the day they become eligible.

Summer Budget Summary

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The Chancellor’s summer budget means several changes that will affect employers from April 2016.

1. Introduction of a new compulsory National Living Wage for workers aged 25 and above. Currently, the National Minimum Wage for employees that are 21 years old and over is £6.50 an hour, increasing to £6.70 in October 2015. For those 25 years old and over, this will mean a further increase to £7.20 in April 2016.

2. To assist employers with this additional cost, the new wage will be offset by an increase to the Employment Allowance from £2000 to £3000 per year and Corporation Tax being cut to 18%, a 2% reduction on the current rate.

3. Personal Allowance will increase from £10,600 to £11,000 in April 2016 and to £11,200 in April 2017.

4. The basic rate limit will increase from £31,785 to £32,000 in April 2016 and to £32,400 in April 2017.

5. The higher rate threshold will increase from £42,385 to £43,000 in April 2016 and to £43,600 in April 2017.

6. From April 2016 companies where the director is the sole employee will no longer be able to claim the Employment Allowance.