0800 140 4644
Christmas Parties
With the Christmas season rapidly approaching a quick reminder that there is a tax exemption for employee entertaining. This only applies to “annual parties” available to all staff and is set at £150 per head per annum. If you hold more than one staff function per annum and the entire cost of the events total more than £150 per employee for the year the whole of the event which takes the total over £150 becomes taxable.
The £150 includes the whole cost of the event including taxis, overnight accommodation etc. If employee’s partners or customers are at the party these individuals count when working out if the cost per head was less than £150. Input tax for VAT purposes can only be reclaimed on the proportion that relates to staff.
Employee Business Gifts
Christmas gifts paid in cash, as a bonus or as store vouchers will always be taxable. If you give your employee’s a turkey, an “ordinary bottle of wine” or a box of chocolates HMRC will not tax these as long as the cost is reasonable. However HMRC will not tell us what is “reasonable”. Experience shows less than £50 per head is usually acceptable.
If the value of the gift exceeds this then it will be taxable and should be included on a P11D or if the employer wishes to pay the tax as part of a PAYE Settlement Agreement.
Christmas Business Gifts
As we head towards Christmas you may be thinking of giving your customers a gift; it is only allowable for tax purposes if:
– total costs of gifts to one individual per annum does not exceed £50
– gift bears a conspicuous advert for the business and
– gift is not food, drink or exchangeable vouchers
However, a sample of a trader’s product is allowable even if they are food, drink or tobacco.
If you have any questions about any of the above, please get in touch with the Black & White team on 0800 140 4644!
