After such a challenging year, you may be considering treating your employees to a gift or perhaps arranging a get-together. With the Coronavirus restrictions still in place, you won't be able to have a traditional Christmas party however many businesses are planning virtual events to help boost morale and thank their team for all their hard work this year.
We thought it would be useful for you to know what the HMRC rules are relating to virtual Christmas parties and also for giving gifts to your team.
Tax exemption on Virtual Christmas parties
The HMRC has stated that tax exemptions will apply to Virtual Christmas parties in the same way that they apply to traditional Christmas parties. Employers can spend up to £150 per head (including VAT) towards the cost of a party without creating a tax liability.
It is important to note that to qualify the party must be open to all staff employed by the company. Or if there are different locations, then the party must be available to all staff within that location.
Tax exemption on Christmas gifts
If you want to give your employees a gift this Christmas, then have a read of these conditions to ensure that you are eligible for tax exemption.
- The cost of the gift must not exceed £50 per employee
- The gift should not be cash or a cash voucher
- The employee should not already be entitled to the gift/benefit as part of their contractual arrangement
- The gift/benefit should not be provided in recognition of particular services performed by the employee as part of their employment duties
We hope this helps you and allows you to spread some festive cheer within your organisation. If you want to read the full details relating to gifts to employees throughout the year, then click here – The HMRC Manual.
If you would like any further advice relating to payroll or tax exemptions relating to employees contact us.
You can call 01623 490 120 or email