Giving money to staff - tax implications?
Discussion
A powerfully built Director who is an extremely generous CEO wants to give up his annual bonus. Instead he wants to donate it into a staff hardship fund.
Given that he's waived his entitlement to the bonus I assume no tax is payable by him?
Also Is there any way that the company can make hardship payments to staff without them being taxable?
Given that he's waived his entitlement to the bonus I assume no tax is payable by him?
Also Is there any way that the company can make hardship payments to staff without them being taxable?
Doofus said:
He can gross the payments up so the employees receive a specific amount net of tax and ni.
He'd rather they get the grossed up amount than have tax/NI deducted. Basically he's loath to give up 33% to HMRC if it can be avoided.I suppose Xmas hampers might be a good way of distributing his largesse but I believe these have to be made available to everybody rather than just targetting a few people.
Countdown said:
He'd rather they get the grossed up amount than have tax/NI deducted. Basically he's loath to give up 33% to HMRC if it can be avoided.
I suppose Xmas hampers might be a good way of distributing his largesse but I believe these have to be made available to everybody rather than just targetting a few people.
He could do that. Up to the value of £50 per employee, without them having to pay income tax.I suppose Xmas hampers might be a good way of distributing his largesse but I believe these have to be made available to everybody rather than just targetting a few people.
snuffy said:
Doofus said:
He can gross the payments up so the employees receive a specific amount net of tax and ni.
But that wasn't the question.The question was how to make the payments whilst avoiding paying income to HMRC.
I'd love to hear the answer !
snuffy said:
Countdown said:
He'd rather they get the grossed up amount than have tax/NI deducted. Basically he's loath to give up 33% to HMRC if it can be avoided.
I suppose Xmas hampers might be a good way of distributing his largesse but I believe these have to be made available to everybody rather than just targetting a few people.
He could do that. Up to the value of £50 per employee, without them having to pay income tax.I suppose Xmas hampers might be a good way of distributing his largesse but I believe these have to be made available to everybody rather than just targetting a few people.
Presumably his staff are members of the pension scheme? If he is currently contributing 3% and the staff 5%, he could temporarily cover the full 8% and allow his staff could take home that bit more each month (as they wouldn’t have to contribute ‘their share’ of the total min. pension contributions, but if they are low earners, the numbers will be fairly inconsequential.
If he really wants to pay ‘no tax’, he could make more generous pension contributions on their behalf, but I appreciate that this would not alleviate hardship in the short term.
If he really wants to pay ‘no tax’, he could make more generous pension contributions on their behalf, but I appreciate that this would not alleviate hardship in the short term.
Countdown said:
He'd rather they get the grossed up amount than have tax/NI deducted. Basically he's loath to give up 33% to HMRC if it can be avoided.
I suppose Xmas hampers might be a good way of distributing his largesse but I believe these have to be made available to everybody rather than just targetting a few people.
Hampers are taxable as a benefit in kind anyway I suppose Xmas hampers might be a good way of distributing his largesse but I believe these have to be made available to everybody rather than just targetting a few people.
E63eeeeee... said:
Pretty sure you can do that 50 quid thing up to six times per financial year too - lots of companies do this as a thank you voucher scheme. Iirc the rule you do it under is called something like small gifts.
Yes, that comes under the "Trivial Gifts" exemption. (£50 a time x 6). However he was thinking £500 a time. 
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