1. We would like to take our staff out for a Christmas lunch. How much can I spend without incurring any tax problems?
With Christmas fast approaching (to the dismay of many!), here’s a reminder of the tax treatment of benefits and gifts to staff over the festive period:-
• A tax exemption is available for expenditure of up to £150 inclusive of VAT for each member of staff. Any more than this and the entire amount is treated as a taxable benefit on the employee.
• Christmas gifts of cash or vouchers will always be taxable on the employee. However HMRC will not seek to tax a seasonal gift generally up to the value of £50 per member of staff.\
Remember this £150 tax exemption applies to “annual parties” so if a Christmas party isn’t possible, the same rules would apply to say a summer BBQ or staff outing.
2. One of my employees has mentioned that his pay should have been increased from the 1st October. Is this correct?
Your employee is correct in the fact that the National Minimum Wages has increased as of 1st October 2014. The main rate for 21yrs and over is £6.50 whilst 18-20’s is £5.13, under 18’s is £3.79 and there are different rates for apprentices.
I have received a letter this morning from HM Revenue & Customs saying that I have paid too little tax and that I owe them £1,154. Apparently, my ‘coding notice’ was incorrect and my employer has deducted the wrong amount of tax. What can I do?
PAYE notices are sent out to employers telling them how much tax to deduct. However, the new computer system generating these notices has inaccurate information and therefore the notices have been wrong.
Firstly you need to check that your coding notice is correct. Does it accurately reflect your situation i.e. are you receiving your full personal allowances, are there any benefits or expenses include. If they are correct and there is tax due then HMRC have said they will be deducted any amounts due over a 12 month period from April 2011. If you will suffer undue hardship because of this then you need to speak to HMRC and explain your situation. If you are still unsure of our position then you will need either contact HMRC or a professional adviser.
We run a small retail business, with many part time employees. Are there any changes to the minimum wage coming up?
Yes, every October the minimum wage increases and as from 1 October 2010 the rates per hour are as follows: 21 yrs and over - £5.93, 18-20 year olds - £4.92, 16-17 year olds - £3.64.
We are thinking of setting up a new business in the next few weeks and I have read that we do not have to pay National Insurance contributions (NIC) on any employees we take on. Is this correct?
From the 6 September 2010 to 5 September 2013, any new businesses outside London and the South East & East of England can benefit from a NIC holiday. The scheme allows up to £5,000 of NI to be saved on each of the first 10 employees taken on since the 22nd June 2010. There are strict criteria on what HMRC consider to be ‘new’ businesses though.
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