As we look forward to our 10th anniversary celebrations here at MyTax (how time flies), thoughts turn to partying! When you do the same, it’s reassuring to know that the costs of entertaining your staff may be an allowable deduction against your business taxes and VAT may also be reclaimable (if you’re registered). You can avoid creating a benefit-in-kind for your employees provided all staff are invited and the total annual spend is within prescribed limits.
A long service award / gift to an employee with at least 20 years service is usually an exempt benefit, so not taxable on the employee nor reported as a P11D benefit. The value of the gift should be limited to £50 for each year served. Gifts of cash or assets readily convertible to cash (shares, for example) are best avoided as these are likely to be treated as income and taxed accordingly.
As always, exceptions and conditions apply, so please ask us for guidance – we’re here to help you save tax!