It was Christmas Day in the workhouse…

It was Christmas Day in the workhouse

The happiest day of the year

The men’s hearts were full of gladness

And their bellies full of beer

Well , they might have been, but if the Christmas party cost more than £150 per head there is a tax implication. In fact, current tax legislation says something like this: As an employer you can throw parties to the value of £150 per employee per annum.

This means if you threw a summer barbeque that cost £100 per head, you only have £50 per head left to spend on seasonal fun… at least that is tax deductible.

Along came the workhouse master

Through his dank and dreary halls

He wished his men Merry Christmas

But all he got was… very little thanks!

That’s probably because he wanted to give his employees a £1,000 each in cash. The problem was all his workers were high rate tax payers so £1,000 actually related to something less than £600 when you take into consideration 40% tax and National Insurance.

Up jumped a jolly old worker

His face as bold as brass

‘We don’t want your Christmas bonus

You can shove it up your… tax return!’

There are some alternatives to cash. The old favourite is vouchers but there are still issues. A voucher is classed as a Benefit in Kind and tax will be deducted at 40% for the work house master’s staff when P11Ds are submitted after the end of the tax year.

This vexed the work house master

And he cried to all his Gods

I won’t pay you a Christmas bonus

You rotten bunch of… ungrateful people

But then he had an idea. Instead of paying cash or vouchers, he gave his team the option of a £1,000 to their pension fund. For those of them who had a private pension the provider supplies a form to allow the contribution to be made and there’s no tax implication for employer or employee… in most circumstances.

But then, thought the work house master, how motivational is a pension contribution at Christmas and what about those employees who haven’t got a pension?

What a quandary! Sometimes it’s so hard to know what to do to motivate the team.

1 comment for “It was Christmas Day in the workhouse…

  1. No Guru
    10 December, 2009 at 11:53

    Well said!
    I can't believe there hasn't been even more outrage about this. The last company to blackmail an electorate was Enron (in response to regulation effectively blacked out California). Again at the heart of it, a lack of Values. Once the UK taxpayer became a stakeholder there should have been a fundamental shift in the whole ethos and especially in the Values of the organisation. It seems they have learned nothing and they should be encouraged to go if they feel their "talents" will be recognised elsewhere.

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