2021 has been another difficult year. COVID-19 doesn’t seem to be going away anytime soon and many of us are grappling with the idea that working from an office full-time might not be the way to go.
And with Christmas just around the corner, many of us are also wondering whether to have an office party. You might not want to throw a big do but doing something to thank your staff for all their hard working is undeniably a nice gesture.
But like everything there are various rules and regulations you have to bear in mind, so let’s take a look at what you can and can’t do.
Holding staff events
The cost of holding a staff event, whether that’s a Christmas party or something at another time of the year is an allowable tax deduction for businesses. This applies whether the event is in-person or virtual. Costs can include food, drink, tickets to events, accommodation and taxi fares. And if you are feeling really generous, this also applies to your employees’ partners. Just remember:- The cost per head should not exceed £150 including VAT per person in any tax year. This means you can hold a couple of events, just as long as the cost per person doesn’t go over that amount.
- Any events you hold should be open to all employees.
- You can claim back VAT, but only on money spent on your employees, not their partners.
- If the party is only for partners or directors of the business, then you won’t be able to claim back any VAT.
Giving your team gifts
If you want to give your staff a Christmas gift, it has to be something HMRC considers to be trivial otherwise it will be taxable. A good example of this is that a box of chocolates would be acceptable, but a food hamper wouldn’t be. Any staff gift:- Must cost £50 or less
- Can’t be cash
- Can’t be a cash voucher as it has a cash value so would be taxable
- Mustn’t be a reward for performance
- Can’t be in the terms of their contract.
Sending Christmas cards
Sending Christmas cards is a tax-deductible expense, but if you are a limited company a better option would be to donate to charity. This is because you will end up paying less Corporation Tax if you give to charity or a community amateur sports club.Giving your clients gifts
It’s fine to give you clients a little something, but just make sure you follow these rules:- It must be business related, so can’t be food, drink or tobacco, unless they are samples of your products.
- It must carry a clear ad for your business, for example branded mugs or pens.
- It must cost less than £50 in one taxable year
- You can’t give vouchers.