What can I claim during Christmas?

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Keep HMRC happy this Christmas

Where do I stand with Christmas parties?

Most people know that an employer can spend £150 per head including VAT, for their christmas party. This figure is per head, not per employee. Also, £150 is not a limit per employee it is per person.

If the cost is £151 per head, then the full amount is taxable not just the amount over £150.

People dropping out reduce your per head figure!

Can customer gifts be tax free?

Customer gifts are only allowable as a tax deduction if the total cost to each customer per year is less than £50. The gift must obviously advertise the business and it isn’t food, drink or tobacco.

Tax free gifts?

Gifts you give to your employees are normally exempt from tax and national insurance contributions (NICs). However, only minor gifts are allowed, it must cost £50 or less, and not be part of the employees’ contract or a reward for performance. So classic gifts, including a bottle of wine or box of chocolates, would be exempt from tax.

It must also not be a cash reward as HMRC will tax this as earnings.

Vouchers?

If you give your employees cash vouchers, the amounts would need to be put through the payroll and be subject to tax and NICs. Where the voucher exceeds £50, these must be report on a P11D form to HMRC. Those under the £50 threshold see point 2.

Tax free awards?

At the end of the year, you may decide that your staff deserve a little extra. In order to reward your hardworking employees over the festive period.

You can offer them two kinds of rewards:

Encouragement awards and financial benefit awards.

Encouragement awards are tax free up to £25, these are for good suggestions or to reward for initiative shown. Financial benefit awards are exempt up to £5,000, these are for saving or making the firm money.

There are, of course, certain requirements that your employees must meet. For example, the encouragement awards must be available to all employees.

 

If you would like to see more, Jonathan Amponsah has written an article here:

https://www.accountancydaily.co/how-make-christmas-tax-deductible-and-keep-hmrc-happy

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