TaxPersonal TaxCompanies hit with extra national insurance on gifts

Companies hit with extra national insurance on gifts

Companies face even higher than expected national insurance increases and more red tape from April after a little-noticed amendment to the Child Support, Pensions and Social Security Bill, KPMG said today.

The change means that gifts given to company staff by external suppliers will have Class 1A NIC applied to them, with employers also being responsible for policing the arrangements.

This is in addition to companies having to pay 12.2% NIC on a much wider range of benefits they provide to staff.

Inez Anderson, Remuneration Consulting Partner at KPMG, said: ‘The third party arrangements will be an unwelcome administrative burden to a great many companies. If, say, Sony promised sales people at Dixons that they would get Marks & Spencer vouchers for every Sony TV they sold, Dixons will now be responsible for checking each individual arrangement and settling the NIC, with penalties if they get it wrong. At a time when many companies are complaining of red tape, this is not at all welcome.’

As an example, for an employee who has season ticket and other interest-free loans totalling £6,000, free local gym membership costing £575 a year and BUPA family membership at £600 pa, the additional cost to the employer will be almost £190 a year.

Elton John locked in battle with the Revenue over National Insurance Contributions

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