As the holidays approach, consult our guidance below to help you keep compliant while planning some well deserved time off!
If you’re shutting the office for the holidays and are paying your staff early, don’t forget to submit your payroll before you close up. Don’t change the payment date though – if you would normally pay your employees on the last day of the month then report the payment date as 31st December. Keeping the normal pay date helps to protect your employees’ eligibility for Universal Credit.
It might be a good idea to check your employees’ contracts to agree with your staff how much annual leave they can carry over into 2022, especially if they have built up a lot of untaken leave this year.
It’s worth remembering that gifts to employees become chargeable to income tax and national insurance if the gift is over £50 (including VAT). These gifts would be reportable on a PAYE Settlement Agreement that is filed after the end of the tax year (5 April). Any cash gifts or bonuses for employees must go through payroll as earnings. Gifts to customers are disallowed for tax unless they are a conspicuous advert or a trade sample (although it cannot be food, drink or tobacco). Gifts to charities can be tax deductible but the tax treatment will depend on whether you are a limited company or a sole trader.
If you are able to hold an annual event this year whether it’s in December or delayed until the new year, remember that the event becomes taxable if you spend over £150 (inclusive of VAT) per head. If you go over the threshold, the whole amount becomes taxable and should be reported on a PAYE Settlement Agreement.
Other tasks such as VAT returns and accounts deadlines don’t move because it’s the holiday season, so make sure you’re up to date with due dates for filings and tax payments. Don’t forget that 2020/21 self assessment tax returns are due by 31st January too – we recommend submitting these in advance of the deadline to avoid the last minute rush!