With the Christmas countdown on and a festive feeling already in the air, thoughts may be turning to the anticipated return of the work's Christmas party, as well as any other seasonal gifts and treats you want to give your employees.
To help with the celebrations, Santa Claus may come in the form of HMRC this time around! Below are some helpful tax reliefs that you could take advantage of, so that the practice and your employees can enjoy the festivities without being left with a surprise tax bill at the end!
The classic Christmas party
As an annual event, this is an allowable expense for you as the employer and is a tax-free benefit for the employees so long as the following conditions are adhered to:
- The total cost, including transport and any incidental accommodation, is no more than £150 (including VAT) per head; and
- The party is open to all staff (or all staff at a particular location).
Employees' partners can also be invited to the party but, if they are, all staff must be entitled to bring a partner. The £150 limit per head is for all the people attending (not just the employees).
One trap to be aware of is guest dropouts! The £150 exemption is based on the number of people actually attending the event, so, if you are at the top end of the allowance and you have a few last-minute cancellations which tips the cost to just over £150 per head, then the whole cost would be subject to tax and NIC and not just the amount in excess of the £150 cap.
If you are still erring on the side of caution with a Christmas party this year, or you are feeling extra generous and would also like to give your employees a present, then this can also be free of any tax implications in certain cases.
The gift must be classed as a 'trivial benefit' to be exempt from tax and NIC and therefore cannot be too lavish. Classic seasonal gifts such as a turkey, wine or chocolate would all be fine providing they do not exceed the specified limit of £50 each (including VAT). The gift cannot be cash or a cash voucher to qualify for the exemption, but a gift of high street vouchers is permissible.
For the gift to be eligible as a trivial benefit, it must not be provided as a reward for the employee’s work or performance, nor should it be a contractual benefit. It should also be noted that if your preference is to give your employees a cash Christmas bonus, then this will always be taxable on the employee.
For more information and further advice, please contact a member of the Dental team on 01242 680000.