As the festive season approaches, it’s time to plan those Christmas perks for your team. Here’s a quick guide to staying on the right side of HMRC when rewarding your staff:
Christmas Bonuses
Cash bonuses, or vouchers that can be exchanged for cash, are considered earnings. These must go through payroll and are subject to Income Tax and National Insurance.
Christmas Parties
Staff parties can be tax-free if they meet these criteria:
- • The event is annual (e.g. a Christmas party).
- • Open to all employees.
- • Costs £150 or less per head (including VAT).
- Exceeding the £150 limit? The whole amount becomes taxable, not just the excess.
Trivial Benefits
You can give tax-free, small festive gifts to employees under the “trivial benefits” rule if:
- • Each gift costs £50 or less.
- • It’s not cash or a cash voucher.
- • It’s not a reward for work or performance.
- • It’s not part of a contractual obligation.
For tailored advice, feel free to get in touch. Let’s keep the season merry and compliant!