The C Word: What can employers do at Christmas?
It’s December so we’re now allowed to say the C word…
“It’s nearly Christmas! Is it time for a party?”
Many companies offer some Christmas treats, like a meal out or a party. But with costs rising, employers will want to know whether they can claim these parties and fun as business expenses. Staff entertainment can be claimed against corporation tax if it’s only for your staff (you can’t include any customers or other business contacts) - but it potentially creates a tax liability for your staff through being a benefit in kind. Not the best Christmas present!!
“But, there’s an allowance for Christmas parties - right?”
Well not exactly - there is an exemption on one annual celebration up to £150 per head - this must be an annual event and open to all employees. However, it can only be used on a single event - so if you’ve already used up your allowance on a fun day in the summer, this will not be available to you for Christmas parties.
“So what about people who already used up the party exemption? Can they offer any Christmas fun?”
For those people, you could consider offering a trivial benefit.
“What is a trivial benefit - it sounds like a board game from the 90s?!”
Employers can provide trivial benefits to their staff if they meet these rules:
No more than £50 per head
It cannot be cash or equivalent, like vouchers
It cannot be in their contract
It must not be related to performance
So, you might not be able to have a massive party but you can offer a bit of Christmas fun!
If you’re looking for support with making the right decision around your spending at Christmas, or year round - Accountability Edinburgh can help!
You can read more details of the rules on HMRC’s website: https://www.gov.uk/expenses-benefits-social-functions-parties and https://www.gov.uk/expenses-and-benefits-trivial-benefits