How to get maximum tax relief on the office Christmas party and gifts

The countdown to the Christmas season is nearly upon us and most firms have either planned their Christmas party or are madly trying to get inspiration for a venue this year.

It’s worth giving a (very) brief thought to the tax and NI implications on Christmas parties and gifts. Exemption from tax and NI are available and here are the rules (in the main):

Staff Christmas parties – you can spend up to £150 per person and they must be open to all employees

Gifts to employees – the general rule is that small gifts do not attract tax or NI and the usual examples are a turkey or bottle of wine.  More expensive items may still be tax allowable for the employer but attract a Benefit in Kind charge for the employee (which come with a NIC Class 1A charge)

Gifts to client – the gift cannot be tobacco, food, drink or exchangeable vouchers; it must not contain any advertising for the business and the total value of gifts to one client must not exceed £50 in any given year.

So, strict rules on gifts some might say but play by the rules and you could have a great Christmas bash without handing over any more money to the taxman!

Curo October 2012.