Tax Implications of Christmas Parties and Staff Gifts

Introduction

As we are soon to enter the Christmas party season and the time of year for giving gifts it is important for employers to be compliant and remain on the good list and to keep the tax inspector off the guest list.

Employers can provide a party and/or Christmas gifts to employees’ tax free providing the relevant qualifying conditions are met.

Christmas staff party – Annual function exemption

Annual functions such as Christmas parties which are generally open to all employees and cost no more than £150 per head are not taxable.

Where it is not practical or possible for an employer to hold a single function, for example, they have several sites, the exemption can still apply across separate locations and departments.