01/03/2024

Christmas Parties and Trivial Benefits

With the festive season approaching, Christmas parties and gifts for employees will no doubt be on the minds of many businesses.

Christmas Parties are tax deductible if they meet certain criteria. Your event must be annual, open to all your employees and must not exceed £150 per person. If you allow employees to bring a guest, the cost of the guest will have to be absorbed within the £150 limit. If the total annual expense per employee exceeds £150, the total cost of the event is no longer tax deductible and becomes taxable as a benefit in kind requiring a P11D submission to HMRC for your employee.

Trivial Benefits offer a tax efficient way of rewarding your employees with non-cash gifts such as a bottle of champagne or a store voucher. The benefit is exempt from Tax and National Insurance for both the employee and the employer. The employer will also be entitled to claim Income Tax or Corporation Tax relief on the cost. To qualify as a Trivial Benefit the gift must cost no more than £50, must not be cash or a cash voucher and must not be a reward for services or in any way contractual.

There is no limit to the number of Trivial Benefits given to employees.

HMRC do impose an annual cap of £300 on exempt trivial benefits provided to a director of a close company.