Christmas Party
You can host a Christmas party and as long as the following conditions are met there are no tax implications for you or your employees:
- Must be available to all employees
- Cost no more than £150 (Inc. VAT) per head for all attendees
Please note that the annual exemption can cover multiple events during the year (so long as they are annual events and not one-offs) and that the £150 per attendee is not an allowance, i.e. if the cost exceeds £150 per head for any annual party the full amount becomes taxable on the employee and in turn, you as the employer.
Gifts to staff
If you are looking to reward your employees by giving them a bonus this should always go through payroll and have the appropriate tax and national insurance deducted from it.
However, if you are simply wanting to give your employees a gift for Christmas, as long as the value of the gift is under £50 this will be tax free under the trivial benefits rule, usual gifts include hampers, bottle of fizz or vouchers. Whilst there is no stated cap on the number of times a trivial benefit gift can be given over the year (unless directors are involved), we would not recommend these are used regularly as these may be perceived as rewards or to incentivise your employees.
As with the annual parties, the trivial benefits exemption is for amounts up to £50, if the £50 is exceeded then the full amount becomes taxable on the employee and in turn, you as the employer.
Gifts to clients
If you are looking to wish your clients and contacts a Merry Christmas this year then HM Revenue & Customs allow you to give a business gift worth up to £50 to any one person and for that be tax deductible. However, there are some conditions which must be met:
- Must include some form of advertisement for the business.
- Must NOT be food, alcohol, tobacco or vouchers which are exchangeable for food, alcohol or tobacco.
If the gift costs more than £50, this includes VAT and any delivery costs, then the whole amount will not be eligible for tax relief.
The next steps
For more information, get in touch with Kimberly Simmons on k.simmons@uhy-uk.com or your usual UHY adviser.
