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A Guide to Tax Relief for Businesses at Christmas

At this time of year our thoughts turn to Christmas and treating staff to a well deserved Christmas party/ Christmas gift. The guide below details how to ensure that your business is also given a present this season by making the most of the Tax Relief’s available.

Christmas party
The cost of a staff party/annual event is allowable for tax purposes, and as long as the following conditions are met there will also be no chargeable benefit to the employee:

  • The function must be available to all employees or to all at a particular location
  • The cost of the annual event must total less than £150 (inclusive of VAT) per head. When calculating this amount all costs including transport to/from the event or any accommodation provided must be included. The cost is calculated on the basis of an average per head, included in this count are the partners or spouses of staff attending.
  • VAT is recoverable on the proportion of the event attributable to staff entertainment i.e. this does not include staff partners or spouses.
  • Christmas Gifts to employees

Any cash gifts to employees at Christmas will be counted as ordinary earnings and will be subject to PAYE.

There are however some gifts that HMRC consider so trivial that the benefit will be exempt from any tax. For the Christmas season HMRC has specific guidance ‘An employer may provide employees with a seasonal gift, such as a turkey, an ordinary bottle of wine or a box of chocolates at Christmas. All of these gifts can be treated as trivial benefits.’

From everyone at Mclintocks we wish you a very Merry Christmas!