According to the Mail on Sunday, HMRC’s high net worth unit has a new target in their sights, the perks enjoyed by some footballers and their families. Whilst the provision of benefits to employees is a practice which has been around since time immemorial, the regulations on taxable and non-taxable benefits can be complex and the HMRC guidance runs into multiple pages.
Of course, there are some simple regulations which may be sufficient for the majority of smaller businesses. For example, providing an annual employee party is not taxable as long as the cost does not exceed £150 per individual and the event is open to all employees. Similarly the provision of tea and coffee for employees counts as a trivial benefit which is not subject to tax or NI, as does the provision of seasonal flu jabs.
The difficulty arises when the benefit steps outside the “trivial” list. Spend more than £150 per head on a Christmas party, add snacks to the tea & coffee or offer other forms of immunisation and the entire cost suddenly becomes liable to tax and NI. Step up to the perks enjoyed by some footballers and items such as holidays, first class travel, medical care, free meals and gifts can add up to a substantial tax and NI bill. Whilst there is no imputation that footballers and clubs have failed to declare all their benefits within their tax returns, according to the Mail on Sunday an HMRC spokesperson said “We wouldn’t be doing this if we didn’t think it was going to bring in a lot of money.”
As with all benefits, it is worth checking with your accountant or tax specialist before embarking on the expenditure to avoid costly mistakes later. This is particularly important when providing ongoing benefits or exceptional and substantial items such as relocation costs. Where the benefits cross countries it is particularly vital that full advice is taken up front.
As tax mitigation specialists Newshams are able to give advice on how the provision of benefits to employees can impact on a tax planning strategy.
Contact us now on 020 7470 8820 and ask to speak to a tax adviser about the potential tax implications of the provision of employee benefits or e-mail us at firstname.lastname@example.org and we’ll get straight back to you.
06 January 2012