Staff gifts and entertainment: what can you claim at Christmas?

It's the time of year where everyone wants to let their hair down. Gifts and staff parties are undoubtedly good for morale. But where do you stand from a tax perspective? Accounting Technician Jessica Maddams explains.

With the season of goodwill upon us, many companies will be thinking about what they are able to claim as a business expense when it comes to staff gifts and the Christmas party. This may be the first time a party has been possible for some newly-formed companies after the Covid restrictions.

Christmas Party

To be able to put through the staff Christmas party as a business expense, it must be an annual function that is made available to all employees. The maximum spend per employee is £150. If you were to spend over this amount, then the entire sum would be disallowed (not just the excess amount over the £150). The £150 maximum would still apply if the member of staff were allowed to bring someone along who was not an employee (so the £150 would need to cover the cost of both people).

Staff Gifts

If you are wanting to treat your staff (and yourself) to a Christmas gift, you could do so if you keep the spend per person to under £50. This would mean the gift qualifies as a trivial benefit and is not subject to tax or NI. Sadly though, the gift is not tax deductible, unless it carries an advertisement for the company.

Cash bonuses or vouchers

Any cash bonus (or vouchers that are exchangeable for cash) provided to your employees will need to be classed as earnings in the normal way and go through the payroll. They will be subject to tax and national insurance.

Vouchers that are exchangeable for goods or services are also taxable but will need to be reported on the employee's P11D form. The business will also need to pay the national insurance due on these.

If you are unsure of anything and would like to discuss it further, the tax department here at Page Kirk are on hand with their expertise on all tax matters. Call 0115 955 5500 or email enquiries@pagekirk.co.uk.