Staff Party Ideas, Trivial Benefits & Gifts

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It’s that time of year when Employers would normally be gearing up for Christmas break!

Along with that comes the annual Christmas staff party.

Things are clearly very different this year – but HMRC have confirmed that you can still go ahead and make use of the Staff Party benefit – albeit virtually!

 

What does this mean for our Staff Christmas Party?

You can still throw that shindig (whether in person or virtually) and treat the team to food, drink & entertainment!

You can spend up to £150 per employee, without triggering any tax consequences!

To be exempt, the party or similar social function must be all the following:

  • £150 or less per head
  • Annual, such as a Christmas party or summer barbecue
  • Open to all your employees

 

Separate locations and departments

If your business has more than one location, an annual event that’s open to all of your staff based at one location still counts as exempt.

You can also put on separate parties for different departments, as long as all of your employees can attend one of them.

 

Multiple annual events costing less than £150 per head combined

As long as the combined cost of the events is no more than £150 per head, they’re still exempt.

 

What about staff gifts?

Some Business owners may have heard of something called “Trivial Benefits”, but for those who haven’t let us explain…

HMRC allow “trivial benefits” to be given to employees (including Directors!) of up to £50 per gift – IF all of the following conditions are met:

  • It cost you £50 or less to provide
  • It isn’t cash or a cash voucher (cannot be exchanged for cash)
  • It isn’t a reward for their work or performance
  • It isn’t in the terms of their contract.

 

Examples of trivial benefits

The type of trivial benefits that are allowed include:

  1. Taking a group of employees out for a meal to celebrate a birthday
  2. Buying each employee a Christmas present
  3. Flowers on the birth of a new baby.
  4. Amazon Vouchers etc.

If the cost of the benefit is over £50, the whole amount is taxable, not just the excess over £50.

In situations where the individual cost cannot be estimated accurately due to being a group event, calculating the average cost per employee is acceptable.

 

The type of benefits not allowed as a trivial benefit exemption include:

  • Providing a working lunch for employees (this is related to their employment)
  • Gifts, incentives or events related to performance targets or results
  • Gifts, incentives or events in relation to employment services e.g. team-building events
  • Taxis when employees work late

 

Directors of ‘close’ companies

You can’t receive trivial benefits worth more than £300 in a tax year if you’re the director of a ‘close’ company.

A close company is a limited company that’s run by 5 or fewer shareholders.

 

Summary!

This has been such a tough year for everyone with Covid-19, working from home and lockdowns across the country.

If you have a team who have stood by you and helped your Business through 2020, why not show them some love, and treat them to a party or gift! 

 

If you have any questions, just get in touch where we are waiting to help you and your business thrive and grow!

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