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.