A few tax tips on Christmas parties and gifts to employees
15th December 2015
Now that Christmas is almost upon us again, we thought it might be helpful to give a little reminder of the tax exemptions available on gifts and parties.
Tax must always be paid on cash gifts and vouchers provided to your employees as Christmas presents, but certain seasonal gifts can be treated as trivial benefits and are therefore not taxable. According to HMRC, items such as chocolates, an ordinary bottle of wine, or a turkey are trivial benefits. Should the gift extend beyond this, say to a case of wine or a hamper, then the cost needs to be considered to determine whether or not the benefit is trivial.
For annual parties, such as the office Christmas party, there is a tax relief of £150.00 per head, inclusive of VAT. This £150 per head applies not only to staff, but also to their guests attending the function. It is important to note that if the whole cost of the party, including taxis and accommodation, goes even a penny over £150 per head, then the entire cost is taxable as benefit in kind. Alternatively, tax can be paid by the employer though a PAYE settlement agreement.
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