How HMRC is Helping You Celebrate Christmas Through Your Business: 3 Key Benefits
The festive season is here! As a business owner, you might be thinking about ways to spread holiday cheer with your team—or even treat yourself. The good news? HMRC allows businesses to enjoy the season while taking advantage of some fantastic tax relief opportunities. At ABM Orkney, we’re here to help you navigate these benefits and make the most of the season. Here’s how Christmas expenses can work in your favor:
1. Christmas Party Costs: Up to £150 Per Employee
Throwing a festive bash? HMRC lets businesses claim tax relief on annual Christmas parties, no matter the size of your company. Sole directors, small businesses, and even single-employee companies can take advantage of this.
What You Need to Know:
Businesses, including ABM Orkney, can spend up to £150 per employee (including VAT) on an annual event. This covers food, drinks, transport, and venue hire.
Key Conditions:
• It must be an annual event: You can only claim for one celebration each year.
• The event must be open to all employees: Even if you’re the sole director, you can claim for yourself and a guest (e.g., your spouse) as long as it’s a business-wide celebration.
• Stick to the £150 limit: This includes VAT. Exceed it, and the entire amount becomes taxable.
The best part? Staying within the limit means no income tax or National Insurance liabilities. ABM Orkney can help ensure your party expenses are accurately tracked and compliant, so you can focus on celebrating.
2. Trivial Benefits: Gifts Worth Up to £50
Want to give a small token of appreciation? HMRC’s Trivial Benefits Scheme lets businesses give tax-deductible gifts worth up to £50 to directors and employees.
What You Need to Know:
You can gift anything from a bottle of wine to a gift card or chocolates, as long as the value stays under £50. And yes, it’s fully tax-free for the business!
Key Conditions:
• No cash or cash vouchers: Gifts must be true tokens of goodwill.
• Not linked to performance: The gift must be given as a gesture of appreciation, not as a reward.
• Director cap: Directors of close companies (with five or fewer shareholders) can receive up to £300 worth of trivial benefits per year.
So whether it’s a small gesture for your team or a thoughtful gift for a fellow director, ABM Orkney ensures your generosity is tracked and meets HMRC’s criteria.
3. Unlimited Trivial Benefits for Employees
HMRC’s seasonal generosity doesn’t stop there. For employees, you can give an unlimited number of trivial benefits (each worth up to £50) throughout the year.
What You Need to Know:
While directors have a £300 annual limit, employees can receive as many £50 gifts as you’d like—perfect for spreading Christmas cheer. From vouchers to event tickets, these thoughtful tokens will go a long way in showing appreciation.
Key Conditions:
• Keep it under £50: Each gift must stay within the limit, or it loses its tax-free status.
• No cash gifts: Vouchers are fine, but direct cash payments are not.
• Not performance-based: Like directors, employee gifts must be given as a gesture of goodwill.
At ABM Orkney, we help you manage these benefits to ensure your employees feel appreciated without the risk of tax hiccups.
Maximizing Your Christmas Allowances
As the year comes to an end, HMRC gives businesses like ABM Orkney the chance to celebrate in style—while staying tax-efficient. Here’s how you can make the most of it:
• Host a party and use the £150 per employee allowance wisely.
• Treat directors and employees to gifts under the Trivial Benefits Scheme.
• Take advantage of unlimited trivial benefits to thank your team throughout the year.
With the right planning, you can spread holiday cheer while keeping your business financially savvy. And if you’re unsure about how to get it right, ABM Orkney is here to help you stay compliant and maximize your festive benefits.
Happy Holidays! 🎄
Best regards,
Michael Taylor MIAB
ABM Orkney