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HomeNEWSA Christmas gift from Scrooge taxman

A Christmas gift from Scrooge taxman

With the festive season fast approaching, an accounting firm is reminding employers that there’s no need to be a scrooge – staff Christmas parties can be tax-free – thanks to HMRC’s seasonal gift. This rare gift from the taxman allows businesses to spend a tax-free amount of up to £150 per member of staff each year.

Anita Monteith, ICAEW Tax Faculty Technical Manager, explains: “After a busy year of work, what better way to reward your employees than with a chance to let their hair down? A Christmas party can be an excellent way of boosting staff morale as days get shorter, and can make employees feel valued for their hard work, as well as encouraging productivity. Christmas and gifts from the taxman come but once a year – make sure you take advantage.’

The rules apply to any party or similar function, which must be open to staff generally or to workers at a particular location. The tax-free limit applies for a tax year, so an employer can put on both a summer party and a Christmas dinner as long as the total cost for both is less than £150 a head.

However, if you spend as much as one penny over this limit, the full amount spent will become liable to income tax and National Insurance for both staff and employer alike.

 

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