Business Tax, Income Tax
Am I becoming obsessed with poultry? Maybe. Two fowl blogs in three months. Well, this is how it happened.
My theatre buddy Gary is sick of hearing about Taxidermy. A couple of days ago we were having lunch before going to see a matinee of An Ideal Husband at the Vaudeville. I was, as usual, behind with my blog and casting around for inspiration. This bloggin’ malarky is not as easy as I thought.
‘It’s Thanksgiving on Thursday, write about turkeys. Now can we talk about something else?’
Well there’s a challenge: tax and turkeys. Would I show the white feather? Never one to chicken out, especially when there’s blogging to be done, I went hunting for turkey tax facts. Here’s what I found.
Since December 2003 ‘seasonal’ gifts of turkeys from an employer have not been taxed as a benefit in kind. This Scrooge-like change of heart was reported in The Guardian as:
‘A generous reform that apparently tears up guidance on turkeys in place since 1948.’ ‘This is the first year that turkeys will not be taxed,’ said the Treasury.’
HMRC’s Employment Income Manual sets out the guidelines for tax inspectors in deciding whether a turkey is taxable:
An employer may provide employees with a seasonal gift, such as a turkey, an ordinary bottle of wine or a box of chocolates at Christmas. All of these gifts can be treated as trivial benefits.
If the gift extends beyond one of the items mentioned above, for example from a bottle or two to a case of wine, or from a turkey to a Christmas hamper, you will need to consider the contents and cost before being able to determine whether the benefit is trivial.’
Before the change, the rules were that if the employee was a director or earned £8,500 a year or more, the receipt of the turkey had to be declared to HMRC on form P11D (Expenses Payments and Benefits) and the recipient was taxed on the cost to the employer of providing it. If the employee earned less than £8,500 a year, he or she had to complete a form P9D (Return of expenses payments and income from which tax cannot be deducted) and was taxed on (wait for it) the second-hand value of the turkey.
Second-hand turkeys, ordinary bottles of wine? You just couldn’t make this up!
An ex-Senior Inspector of Taxes writing in Taxation magazine in December 2006 added this gloss:
‘With no attempt at political correctness, it is important to note that seasonal gifts might be given for Diwali (India), a Japanese Matsuri festival and others. Small gifts such as an arrangement of flowers may be given at other times, including birthdays, the birth of a child, or on marriage.’
Seasonal means ‘relating to the seasons of the year’ so I don’t think it’s pedantic to question whether birthdays, births and marriages are seasonal occurrences even in the Humpty Dumpty world of HMRC. Pedantic though it may be, in the face of such largesse, I do feel constrained to point out that the phrase ‘matsuri festival’ is tautologous, as ‘matsuri’ simply means festival in Japanese. There are numerous matsuri throughout the Japanese year, often, but not always, connected with the Shinto religion.
Revenons à nos moutons. Provided that Thanksgiving is a seasonal celebration, employees receiving turkeys (of the feathered kind) from their employers can relax and, with a nod to Bob Cratchit, tuck in.
I wonder what Gary will come up with in December. We’re going to see ‘Legally Blonde: the Musical’ so tax and chihuahuas?
You’ll just have to hold your breath and see.
Tax lawyer specialising in business tax, SDLT and VAT