It’s that time of the year when a little extra kindness can make a big difference. If you’re thinking about treating your household staff to a Christmas bonus, here’s a friendly guide to help you navigate through the festive generosity.
Is a Christmas Bonus Mandatory?
While there’s no obligation to give a Christmas bonus unless specified in the employment contract, it’s a wonderful gesture to express gratitude, especially during Christmas.
Determining the Amount
The amount of a Christmas bonus is typically a percentage of your employee’s annual salary. Whether it’s half a week’s pay or a full month’s salary, the choice is entirely yours, and it’s a great way to show appreciation.
Tax Considerations
Yes, your employee’s Christmas bonus is subject to tax. As a Stafftax client, we make it easy by displaying the bonus payment and the corresponding tax on the payslip. It ensures a hassle-free process for both you and your valued staff.
Cash Bonus Option
If you prefer the personal touch of a cash Christmas bonus, you can certainly do so. Just remember that, even for cash bonuses, the tax and national insurance contributions need to be calculated and reflected on the payslip.
Christmas Gifts Reporting
Reporting other Christmas gifts to HMRC may not be straightforward, but it depends on the circumstances. Vouchers, for example, require reporting and tax payment. However, if your gift falls under the category of a ‘trivial benefit,’ there’s no need to declare it to HMRC. Trivial benefits are those costing £50 or less, not in cash or voucher form, not a reward for performance, and not specified in the employment contract.
Making It Happen with Stafftax
For our Stafftax clients, gifting a Christmas bonus is just a few clicks away. In your Employer Members Area, head to the Manage Employees tab, select ‘Bonus’, specify whether it’s a cash bonus, and set the amount. Our dedicated payroll team will take care of the rest, reflecting the bonus and any associated tax on your employee’s next payslip.
‘Tis the season of giving, and a Christmas bonus is a heart-warming way to show appreciation for the hard work and dedication of your staff.
Merry Christmas!
