Non-taxable benefits

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Please forgive us for mentioning the word Christmas in September… but did you know your staff Christmas party qualifies as a tax-free benefit?

There is an exemption from tax, National Insurance and reporting if you provide a party or similar function for employees as long as it meets the following three conditions:

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

When it comes to giving your staff a ‘little extra’ at Christmas you must report any bonuses or cash payments made to employees as this counts as earnings.

However you can give your staff a trivial benefit.

A trivial benefit (for example a box of chocolates or bottle of wine) is exempt from tax, and National Insurance payments and you do not have to inform HMRC of your purchase as long as it:

  • Cost you £50 or less to provide
  • Isn’t cash or a cash voucher
  • Isn’t a reward for their work or performance
  • Isn’t in the terms of their contract

You can also say thank you to your customers/ clients with an allowable tax deduction as long as:

  • The total cost of the gift does not exceed £50
  • The gift bears a conspicuous advert for the business
  • The gift is not food, drink, tobacco or exchangeable vouchers.

For further information about non-taxable payments or benefits, or any other tax matter contact Peter Way-Rider on 01244 343504.