Bankers have received a lot of flak for the size of their bonuses in recent years. However, they are not the only ones who benefit from the bonus culture. An increasing number of employees receive bonuses in a surprisingly wide number of sectors.
According to the Office for National Statistics (ONS), whilst those in the financial and insurance sector received the most, wholesale traders aren’t far behind. Other sectors where bonuses were paid include real estate, retail and administrative and support services.
The ONS has produced figures that show, in the year to April 2014:
Bonuses are treated as income, which means that they are added to other earnings and taken into account for tax and national insurance purposes.
For some though, such as the John Lewis Partnership, their partners will benefit from legislation introduced in April 2014. This legislation, which applies to all employee-owned businesses, means they will benefit from tax-free status for the first £3,600 of their staff bonus.
HMRC is quite specific when it comes to what it will ignore as trivial when it comes to staff gifts. While a bottle of ordinary plonk won’t interest them, anything more than that could result in the recipient having to pay tax on it. This is because gifts and bonuses are treated slightly differently. The reporting requirements and tax due depend on whether you give cash, goods with no resale value, or goods with a cash resale value, as well as who you give them to, and how much they earn.
Talk to us before you make a decision on any gift or bonus to your employees or directors to make sure that its value is maximised for the recipient.
Call us on 020 7537 9043 or submit a contact form to request a call-back.