As Christmas is near, there are a number of points to you need to be aware of. So before you break up, here are some issues you may be unaware of.
Christmas and furlough
HMRC is warning business owners that are normally less busy or closed for the holidays, they cannot furlough staff. HMRC guidance reminds employers that claims for furloughing staff can only be made if the business is affected by Covid-19.
Employees cannot be furloughed simply because:
- They will be taking paid leave.
- The claimant usually does less business over the festive period.
The guidance reminds directors that staff on annual leave should be paid at their normal rate of pay under the Working Time Regulations (WTR). Where this is more than the amount claimed under CJRS, the employer must make up the difference.
Reporting PAYE for Christmas
Some employers pay their employees earlier than usual over the Christmas period.
This can be for a number of reasons; for example, businesses may close, meaning workers are paid earlier than normal. If you pay early before the holiday, you need to report your normal (or contractual) payday as the payment date on your Full Payment Submission (FPS). You submit the FPS on or before this date.
If you pay on Friday, 18 December 2020, but the normal/contractual payment date is Thursday, 31 December 2020, report the payment date on the FPS as 31 December. The submission needs sending on or before 31 December.
Doing this will help to protect your employees’ eligibility for Universal Credit, as reporting the payday as the payment date may affect current and future entitlements.
The overriding PAYE reporting obligation for employers is unaffected by this announcement. You must report payments on or before the date the employee is paid, i.e. payday.
It is the time of year when you usually party with your colleagues. Coronavirus restrictions means partying is restricted to being online this year.
HMRC has confirmed that the annual parties’ exemption (s264 ITEPA03) will apply to costs associated with virtual parties. This means the are treated in the same way as traditional ones.
Therefore, subject to the normal conditions of the exemption being met, the expenses will be exempt. You must be providing entertainment, equipment and refreshments principally for enjoyment or consumption by your employees during the event.
For annual parties, or similar events, no liability to income tax arises providing the cost of the event does not exceed £150 per head.
As the exemption isn’t just for Christmas, it will apply if you decide to postpone your party. But the function needs to take place within the current tax year.
If this is all news to you, then you need to change accountant. We’d be happy to help make sure you take advantage of tax exemptions available to you and keep you up to date with changes. So contact me today for a free discovery meeting.