As I got into my car this morning to head into our Shoreditch office, I could not quite believe what I was hearing – the Christmas music has started already! This got me thinking about the festive season ahead and I was inspired to write my next website article – a reminder on the tax rules which apply when giving Christmas gifts to staff.

It has been another challenging year for businesses and individuals but as indicated by the Chancellor during the latest Autumn Statement, there is a light, albeit a small one, at the end of this particular tunnel. Many will see this as an opportunity to reward staff and celebrate the end of the year. So if you are thinking about giving Christmas gifts to staff, what as business owners are you allowed to do?

  • You can give your staff a voucher as long as it costs you £50 or less. It cannot be cash or a cash voucher and it should be noted that this does not only apply at Christmas. Vouchers can be given to employees (limit of £300 for Directors per tax year) at any time of the year. The vouchers should be given as a gift as in it should not be a reward for work or performance, and should not be in the terms of the employment contract.
  • Staff can be taken out for a meal or a Christmas party. You can spend up to £150 per head (including VAT) on functions to entertain your employees.
  • Staff can be paid a bonus. This would be subject to tax and national insurance
  • Seasonal gifts such as a box of chocolates, bottle of wine or a Turkey. Provided the cost of the gift is trivial (typically less than £50 a head) the gift will not be taxable.

If you are unsure please check with your contact at Lambert Chapman who will be more than happy to assist.

Mark Pearson - Lambert Chapman Senior Manager

Posted by Mark Pearson

The views expressed in this article are the personal views of the Author and other professionals may express different views. They may not be the views of Lambert Chapman LLP. The material in the article cannot and should not be considered as exhaustive. Professional advice should be sought in connection with any of the issues contained in the article and the implementation of any actions.

Lambert Chapman Chartered Accountants

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