Whilst it’s been a year of ups and downs, at LWA we want to give you plenty of positive news with which to end 2020. When it comes to Christmas celebrations, have you considered a virtual Christmas party for your staff? Well, you may still be able to allocate £150 per head as expenses.
Read on below for details of how to claim the Work from Home tax relief benefit if the Covid-19 restrictions have required you to do this.
HAVE YOU CONSIDERED A VIRTUAL STAFF CHRISTMAS PARTY?
HMRC are not the Grinch after all! They have recently announced that employers may arrange a “virtual” Christmas party this year and there will be no taxable benefit for employees provided that all staff are invited and the cost per head does not exceed the normal £150 limit.
Maybe keep it to a modest affair and let’s have a big bash when the Coronavirus pandemic is over as we are allowed more than one event a year within the £150 limit.
PLUS CHRISTMAS GIFTS OF UP TO £50 TO EMPLOYEES
Remember that certain gifts to staff at Christmas are also tax free if structured correctly. Employers are allowed to provide their directors and employees with certain “trivial” benefits in kind, tax free.
This exemption applies to small gifts to staff at Christmas, on their birthday, or other occasions and includes gifts of food, wine, or store vouchers. There are of course a number of conditions that need to be satisfied to qualify for the exemption:
- the cost of providing the benefit does not exceed £50
- the benefit is not cash or a cash voucher
- the employee is not entitled to the benefit as part of any contractual obligation such as a salary sacrifice scheme
- the benefit is not provided in recognition of particular services performed by the employee as part of their employment duties (or in anticipation of such services)
For more advice, please contact one of our friendly tax team.
HOW TO CLAIM WORK FROM HOME TAX RELIEF
Following recent government announcements regarding working from home due to Covid-19, a claim can be made via an employee’s personal tax account to claim for the whole of the tax year 2020/21. HMRC will adjust their tax code and they will receive tax relief on the claim. As an example, for a basic rate taxpayer this will be around £62.00. There is a similar tax break for the self-employed which provides a deduction from profits of up to £26 a month.
It is straightforward to create a personal tax account – your employees will need their passport and a recent payslip/P60 to verify their ID.
Just a reminder for non-LWA clients that the deadline for submitting your self-assessment tax return and paying any tax due for the year ending 5th April 2020 is 31st January 2021! If you think you may struggle with making payments as a result of finances being affected by Coronavirus, you can use the HMRC Time to Pay service to request support. Take a look at our blog here.
If you have any queries or if your employees need our support with any aspect of their personal tax returns, please contact a member of our Tax Team on 01925 830 830.
Find out more on WFH tax relief here.
NATIONAL MINIMUM WAGE INCREASE AND NATIONAL LIVING WAGE TO INCLUDE 23 & 24 YEAR-OLDS
As a result of the pandemic leaving so many young people out of work, the National Living Wage is being extended to people aged 23 and over, meaning they must be paid at least £8.91 per hour from next April. The National Minimum Wage is also increasing for the younger age groups and apprentices.
- For people aged 21-22, it will rise 16p from £8.20 to £8.36 (up 2.0%).
- Those aged between 18-20 will have their wages boosted 11p, from £6.45 to £6.56 (up 1.7%).
- Wages for 16-17-year-olds will go up 7p, from £4.55 to £4.62 (up 1.5%).
- The apprentice rate will rise 15p, from £4.15 to £4.30 (up 3.6%).
If you need any support from our Payroll Services team, please do not hesitate to call 0161 905 1801.
Read the government press release here.
