Christmas tax treats for staff

Wednesday, 11 December 2019 00:34

The festive season is fast approaching and everyone is looking forward to the annual Christmas party.

As an employer you want to make sure your team enjoy the occasion but the last thing you want is to land them with an unexpected tax bill.

HMRC have specific rules you have to comply with to ensure the event is tax-free.

The first point to note is that the rules don’t just apply to the Christmas Party, they apply equally to another event in the year. The key points are:

  • The cost to you has to be £150 or less per head
  • annual, such as a Christmas party or summer barbecue
  • open to all your employees

If your business has more than one location, an annual event that’s open to all of your staff based at one location still counts as exempt. You can also put on separate parties for different departments, as long as all of your employees can attend one of them..

If you have a number of events during the year the combined cost of all the events has to be £150 or less.

Another good way to look after your team is with Trivial Benefits. A trivial benefit has to satisfy the following conditions in order to qualify for the trivial benefits exemption and be free of tax

  1. No more than £50 per benefit (or an average of £50 if the benefit is provided to a group of employees and it is not possible to work out the exact cost for each individual).
  2. Not cash or a cash voucher (but gift vouchers e.g. for a shop, are allowed).
  3. There is no entitlement to the benefit as part of the employee’s contract (including salary sacrifice schemes).
  4. It is not provided in recognition of a work-related service or employment duty.
  5. In close companies (most small limited companies) there is a limit on the total trivial benefits exemption of £300 per tax year per director (or officeholder). Normal employees don’t have this £300 limit.

A great example of a trivial benefit is a £50 gift voucher for Christmas, so go on, get each member of your team a £50 John Lewis voucher for Christmas!

If you would like to discuss these or any other tax planning opportunities please contact me on This email address is being protected from spambots. You need JavaScript enabled to view it.

Flow

Flow Online Accounting Limited

Holland House, 1-5 Oakfield Sale, Cheshire M33 6TT

Contact: Chris Wrighton

  • 0330 123 5577
  • www.flowonlineaccounting.co.uk
  • This email address is being protected from spambots. You need JavaScript enabled to view it.
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