Business owners have been urged to remember some vital tax rules over the festive period.
Nick Brook, of TaxAssist Accountants in Huddersfield, said Christmas was one of the busiest times of year for many independent traders – such as retailers, restaurants and service providers. But he urged them not to fall into some potentially expensive Yuletide traps.
He said: “We’re urging local business owners to add one more column to their “to do” list this Christmas. We want them to enjoy a well-earned break and to make sure they play by the taxman’s rules and avoid potentially hefty penalties.”
He said: “If you employ temporary workers to help you meet customer demand over the Christmas period, it’s more than likely that they should be on the payroll. But they shouldn’t pay tax or National Insurance unless they have an unusual tax code or earn more than £153 per week.
“Unless the employee declares it on their tax return, it’s illegal for an employer to pay cash in hand without deducting the necessary tax and National Insurance contributions.
“The staff party might now be a happy memory or something you’d rather forget, but make sure you have all the relevant receipts. If the total costs for all of the annual events exceeds £150 a head, it becomes a benefit in kind, so the employee could be left with a headache and a tax bill!
“Staff gifts and bonuses are a great way of saying thank you for your team’s hard work throughout the year, but cash or gift vouchers of any amount are taxable and should go through the payroll. Trivial seasonal gifts such as a bottle of wine, a turkey or a box of chocolates can escape the need to be reported as a benefit in kind. But more generous presents will need to be reported on form P11D and require payment of Class 1A National Insurance.
“And if you tire of indulging over the festive period, you might want to take the pressure off those January tax return deadlines by using the Christmas break to get all the paperwork done!”