As the festive season is drawing closer, it is perhaps time to start thinking about Christmas gifts for your employees. It is not essential to gift to employees at this time of year, but if it is something you would like to do, there are some important things to consider so you do not upset the tax man!
If gifts aren’t your thing and a staff Christmas party is the route you would prefer to take, these are capped at £150 per individual attending. This can be spread across numerous events, but the total cost must not exceed £150 per head, per year. For example, if there are three events held at a cost of £75, £80 and £60 per head each, the latter two can be claimed as exempt but the first event will be taxable in full (it is not possible to just tax the excess over £150).
A gift to an employee can be tax free if it is classed as a ‘trivial benefit’. The cost must be less than £50 each time and it cannot be cash or a cash voucher, but high street vouchers are ok. We have laid out some examples of circumstances that may or may not qualify as trivial benefit below:
- High street voucher worth £50 or less for a non-work-related event e.g. Christmas, new baby, marriage etc.
- Meal provided by the employer to celebrate birthdays or other events (e.g. summer party) where the average cost per head is less than £50.
- Turkey/wine/chocolate provided at Christmas provided the cost does not exceed an average cost per head of £50.
Not a trivial benefit
- Gift voucher of any value provided to employees for meeting certain performance targets or ‘salesperson of the month’ etc.
- Gift provided at Christmas where it is possible to determine the cost per individual e.g. bottles of wines provided to the directors at a cost of £60 each but to other employees at £15 per head, only the latter would be exempt.
- Taxi provided from work to home after working late (but may qualify under the late night taxi exemption).
As always with tax, there are certain conditions to be met in order for the benefit to qualify as tax-exempt. We would recommend advice is sought prior to providing such benefits to avoid a surprise tax and NI bill for the company and its employees.
From all of us at Hazlewoods, we hope you have a Merry Christmas.