Christmas Tax Savings: What are the details?

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Are you full of festive cheer and looking for Christmas tax savings? Find out how you can take advantage of HMRC tax savings during Christmas. Can you claim your office Xmas party? Find out now!
As the temperature drops and talk turns to the bearded guy in the red suit, it’s time to start thinking about spreading a little goodwill. Christmas is an important time for many businesses, as it’s an opportunity to thank staff for their hard work and enjoy some social events.
If that sounds like a blow to the business bank balance, there’s some good news. By spreading a little joy around the workplace, you can enjoy some festive tax savings yourself.
Here’s a look into potential tax savings during Christmas.

Christmas Parties

No matter what industry you work in, a Christmas party is an almost essential event to boost morale and get everyone smiling.
HMRC recognise that the Christmas party is a genuine cost and they allow a tax-free spend of up to £150 per person. However, not many companies realise this is the amount you are granted per person in attendance, not just per staff member. So if you allow your employees to bring their partners, you can budget for £300 per couple and claim for that.
There are a couple of caveats to be aware of.
If anyone drops out, you must make sure that you don’t go over the £150 per head of people actually attending. If you exceed it, even by pennies, the full amount becomes taxable – not just the surplus sum.
In addition, the £150 limit applies across the full calendar. If your company offers a summer barbecue or dance, any spend here will need to be added in.
It is best to keep some sort of register of who attended your Christmas party.

End of Year Awards

Christmas seems like the perfect time to reward staff who have made a positive contribution to the business throughout the year. You could even combine it with the Christmas party to make it a really big event.
Companies can reward staff up to £5000 tax-free, but there are certain conditions which have to be met.
The reward must be given for suggestions that would benefit your business and these are divided into two categories:

  • Encouragement awards
  • Financial benefit awards

Encouragement awards are for special efforts that an employee has made or for making helpful suggestions to your business. The tax-free limit for an encouragement award is £25.
Financial benefit rewards can be given for any suggestions that will practically save your company money. You can give up to £5000 tax-free for a financial benefit reward.
As with all tax exemptions, there are conditions to fulfil. The primary ones are:

The suggestions must relate to the business
The scheme must be open to everyone
The suggestion cannot have been made at a meeting specifically held for generating new ideas
The suggestion must be considered above and beyond their regular duties

You can find the full conditions relating to this under EIM06600 on the HMRC website.

Christmas Gifts

Christmas isn’t Christmas unless there’s a gift under the tree, and with more tax exemptions, HMRC is helping you to do your very best Santa impression.

1.      Employees

You can give your employees a gift and this will be free of tax and National Insurance providing it is classed as trivial. This means that it’s not worth more than £50, it isn’t cash and must not be a contractual payment. The gift must be unrelated to performance.

2.      Customers

The rules about gifting to customers are a little different. The same limit of £50 per year applies, but the gift must also clearly bear some kind of insignia, logo or other advertising for your business. This gift is not allowed to be tobacco, food or drink (unless that’s the industry your business operates in).

Christmas Tax Savings – Need More Expert Advice?

There are other tax savings you could be taking advantage of this Christmas. To receive expert and personalised tax advice, get in touch with us here at Yorkshire Accountancy.

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