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.