Employee Benefits - Being Kind at Christmas
It’s that time of year when the staff Christmas party is booked and of course you spend a small fortune. So does the cost matter?
As a business, you expect the Christmas party cost to come out of your profit and know you’re going to pay over the odds for a slice of turkey and cold potatoes. It’s Christmas so it’s a great way to say thank you to your staff and you want to treat them. But if you are not careful it will cost your staff too. And here’s why.
As an employer, you have certain tax and National Insurance obligations to fulfill when providing benefits to your staff, and this includes social functions and parties, such as the Christmas party. Benefits in kind may be subject to tax on your employees and National Insurance on you as the employer. A benefit in kind may cover many things, such as medical benefit, car benefits, gym membership etc, thus covering the cost of most staff benefits. Benefits in kind are then reported annually on each employee’s P11D form or via the payroll and your employee will then pay tax on the value of the benefit reported.
However there is an exemption of up to £150 per head for combined annual events, and this would include the Christmas party. But be careful if the per head cost per year is £151 your staff will pay tax on your good deed on the whole sum.
So, what do you need to ensure to make sure it stays tax-free for your team so it doesn’t cost them;
Make sure it is an annual event
It must be open to all of your employees
It must cost less than £150 in total per head per year
Therefore if you want to keep the season merry and avoid any hidden surprises for your staff, get in touch or read on in our resources section for more information.
Watch out for our next blog on Trivial Benefits, which covers Christmas gifts to your employees too.
FUSE is an independent Chartered Certified firm of accountants and tax advisors based in Highgate Village, North London. We provide a dynamic range of services to clients working in property, media, entertainment and professional services. Our clients vary in size from self employed sole traders, small enterprises and medium size businesses. We believe that comprehensive financial planning and sound business financial advice are the keys to growth and profitability.
