Company Christmas Party: Is It Tax-free To Employees?

Businesses and their staff will be looking forward to their annual Christmas party in the upcoming festive months. Providing all of the following criteria are met, the annual event becomes free of PAYE tax and National Insurance contributions for the employee, and is treated as a non-taxable benefit in kind:

The party or similar social function must:

• Be open to all employees
• Be annual (such as a Christmas party or summer BBQ)
• Cost £150 or less per person (including non-employee guest attendees)

Multiple annual events across the year are permitted too, as long as the combined cost of the events is no more than £150 per head per year. This criteria also applies to online or virtual parties.

You should be careful not to exceed the £150 per head limit, otherwise the whole amount will become taxable on the employee, not just the excess.

Other festive gifts to employees (such as a Christmas hamper) can also be tax and NI free, if treated as trivial benefits, providing the gift meets the following criteria:

• It cost you £50 or less to provide
• It isn’t cash or a cash voucher
• It isn’t a reward for the employee’s work or performance
• It isn’t in the employee’s terms of contract

Trivial benefits for directors are capped at £300 per year.

For more information or advice, contact your local Whitings LLP office.

Disclaimer - All information in this post was correct at time of writing.