Spread festive cheer in a virtual environment

  • Matthew Hunnybun, Author |

3 mins read

Working remotely but feeling closer

Following the government’s recent announcements on stricter COVID-19 restrictions, many employees now face working from home for the foreseeable future – or at least the next six months.

CEOs and HR teams should further increase their focus on how they can keep employees engaged when they’re working remotely for a prolonged period.

A common challenge our clients raise with us is around what benefits to provide, and how to create an inclusive social environment while we’re all apart (except for via Teams or Zoom)

About this time of year, we’d typically start planning for Christmas parties – a chance for employees to unwind and celebrate the successes of the year. But what will those parties look like this year?

What can you do for Christmas?

The usual face-to-face get together might not be possible, but virtual events can take place. Remote team games and activities can be a great way for smaller groups to celebrate.

But on top of employers facing the logistical challenges around employee wellbeing and motivation, there are also cost and tax considerations to consider.

In prior years employers would look to utilise the annual parties’ exemption. When this blog was originally published, HMRC had yet to clarify whether, in their view, this exemption could apply to virtual events.

However, on 23 November HMRC updated its guidance to confirm this exemption can apply where an annual function is provided virtually, as long as all other conditions are satisfied.

Employers can also think creatively about what seasonal benefits they can provide within other exemptions and reliefs. For example, the usual celebrations of Christmas parties and lunches may not be possible in the current environment, but home deliveries of trivial benefits below £50 such as hampers, workshop kits, or Christmas presents could boost the morale of your workforce and spread the Christmas spirit.

In cases where it’s not clear that a novel Christmas benefit would be covered by an existing relief, employers can engage with HMRC to ensure they’re compliant.

Even if exemptions aren’t available for the benefits you want to provide, there’s the option of including them on the PAYE Settlement Agreement (PSA) to prevent employees picking up the tax.

Now is the perfect opportunity to have that discussion with HMRC to expand your PAYE Settlement Agreement (P626) and get additional categories agreed.

No matter what rewards and benefits businesses provide to their employees, there may be reporting implications to consider. A full audit trail of the benefits provided, and the decisions made around the tax and national insurance (NIC) treatment (including conversations with HMRC) is very important.

What about the longer term?

We’re seeing the wellbeing and motivation of the workforce – rightly – at the forefront of every company’s mind as we continue in our unprecedented working environment. With a greater focus on finances, employers may be looking to refresh their benefits package ahead of annual benefit renewal windows. Think about the wider benefits that will make a difference to your employees’ wellbeing. Perhaps assistance with online GP services may be more desirable than gym membership.

The challenges around reward and benefits can be lessened by considering what will impact an employee’s life now. What was not important before may be important now, and vice versa. Considering tax exemptions and reporting options may be the cost-effective way of discovering new offerings that will have larger impacts on your workforce. We’ll return to this in a future blog post.