Yes, Christmas has snuck up yet again. Behind the scenes of the rosy cheeks and the jolly chatter will actually be staff concerned about Christmas spending, as well as anticipating how they will be treated with a Christmas work do this year.
The good news is that you can actually treat your staff to a Christmas Do in a tax-savvy way. You get to play Santa, without relying on the elves for their overtime. So if you’re feeling pressure to be generous, don’t panic and go all Bah Humbug just yet. There are actually a few different allowances and exemptions which you can take advantage of at Christmas time to ensure everyone is left smiling.
The Christmas Party Allowance
The what?! Yes, there is, in effect, a Christmas Party allowance although it’s not actually called that. It has the slightly less enticing position of just being lumped in with other expenses, but: it does exist. In short, you can spend up to £150 per employee at an annual event – such as rocking around the Christmas tree with a glass of bubbles in your hand. It can even include a Christmas present too.
However, a word of Scrooge-like caution: don’t spend more. The minute that extra mince pie tips you over £150 per head you’ve got to pay Employer’s National Insurance on it.
Anything Else in the Christmas Cracker?
Sure is. There’s another snazzily named allowance called Trivial Benefits. The good news is that your staff are unlikely to think these benefits are trivial at all. In fact, they are a great way of treating staff tax-free.
Basically, trivial benefits are those benefits which don’t cost you very much to provide – less than £50 to be exact. As long as it’s not cash, or directly given as a reward for their performance and established in their contract, you can simply be Santa just because you feel nice. You won’t need to pay tax, or NI, or even let the tax man know. Good stuff.
That Time of Year
Then there’s another little back door opportunity for the man in red, a.k.a. You. If any of your staff have worked for you for at least 20 years in the run up to Christmas then you are able to give them a long service award, tax free. All you need to be aware of is that the total award must be worth less than £50 for each complete year of service and that you haven’t given them an award within the last 10 years. Furthermore, you can’t just write a cheque and job done. No, you have to put some thought in to the gift rather than pure hard cash.
It can seem a little complicated, and it’s certainly not restricted just to Christmas, but it’s definitely worth knowing about. To be sure you stay on top of when you can pay it, you’ll need your books in order.
No Coal in the Stocking
So if you’re feeling generous, or simply want to be tax savvy, there are plenty of ways to treat your employees this Christmas without channelling your inner Scrooge. You will need to make sure you’ve got exceptional insight into your accounts, to make it above board and not leaving you with a rather un-festive hangover.
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We work very closely with our expert accountants to bring you the latest factually correct tax and accounting news. We also enjoy writing about small business news that we hope you find useful!