Festive Cheer for your Employees

It's that time of year again. The Christmas festivities are underway but how do you celebrate with your staff without upsetting the tax man?

As most employers will be aware payments to employees must either be taxed under PAYE or included on a form P.11D as a benefit in kind. There are a few statutory exceptions, one of which is the office Christmas party. Provided such an event is open to all employees and costs less than £150 per head on average then there will be no taxable benefit on the employee. Other free events may have to be considered in arriving at this average 

Some employers may wish to offer gifts to their employees but worry about the tax implications. The value of gifts will either be a taxable benefit included on form P.11D or the tax may be borne by the employer through a PAYE Settlement Agreement (PSA). There is no statutory de minimis but HMRC accepts that some gifts are trivial in value and do not need to be included as benefits on P.11D or PSA. A seasonal gift to staff such as a turkey, box of chocolates or bottle of wine can be treated as trivial. The total cost to a large employer may be substantial but the gifts can still be considered trivial, and therefore not taxable, if the unit cost to each employee is small.

French Duncan can advise on your specific circumstances on request,

Ann Laverock 

Senior Tax Manager

Email: a.laverock@frenchduncan.co.uk

Tel: 0141 221 2980