How can I make sure that my staff do not pay tax or National Insurance contributions on their Christmas presents from myself? I also want to avoid having to deal with any additional paperwork.
Whether tax and National Insurance payments are triggered depends on the gift given. Smaller presents such as chocolates or turkey would be regarded as ‘trivial’ gifts, and therefore too insignificant to report. This remains true even if you give this type of gift to each employee within a large workforce.
If you were to bestow your staff with cases of wine rather than a single bottle, for example, then the situation is different. You would need to calculate a cash equivalent on which your employee would be taxed via form P11D or payroll. Alternatively, you might make a Pay As You Earn Settlement Agreement (PSA) whereby you agree to pay the tax and NI as their employer.
This can be a problematic area for employers who might want to recognise an employee’s contribution during the year. It is complex and attracts scrutiny from HMRC, so care needs to be taken.