As this is my final update before Christmas I thought a festive mood would be appropriate with some useful information on Christmas tax reliefs!

Staff parties

The office party is allowable as a tax deduction in the business and is not a taxable income for the employee if the party is open to all employees and the cost per head does not exceed £150 (be careful of aggregate costs if another function has happened during the year).

If the £150 limit is exceeded the staff are taxable on the full cost (including spouses/partners who have a separate £150 limit). However, employers may wish to pay the tax on their behalf via a PAYE settlement agreement.

Note that VAT is included in the limit and is only recoverable on the staff element.

Staff gifts

This is commonly tricky area for HMRC. As long as the gift is trivial (there is no definition) then the gifts is exempt from tax and allowable as a business deduction. Such gifts at Christmas could be a turkey, a box of chocolates or an ‘ordinary’ bottle of wine.

This does not apply to vouchers which are subject to tax and national insurance.

Business gifts

Many businesses will give gifts to customers and they are allowable as a tax deduction if the total cost of the gift is under £50, it carries the company logo and the gift is not one of food, drink or tobacco.