Can you Find it – Business © 2017 THE FULL STORY…MERRY CHRISTMAS MR TAXMANPublished in Can you find it Business Edition on Thursday, December 1st 2015
AS many businesses will be aware, there are very few “tax free” perks that they can give to their staff without the Revenue taking a very keen interest and seeking to impose tax and NIC liabilities. For example, if a business wants to provide their staff with free meal vouchers, then the value of the meal voucher must not exceed 15 pence per day, otherwise tax and NIC liabilities will arise. Ebenezer Scrooge springs to mind!
However, even the Revenue have a heart when it comes to Christmas, as they are far more generous when looking at the staff Christmas party. This is because the 15 pence limit is swept away and a “tax free” limit of £150 per person is allowed. As you might have guessed, there are a number of conditions that need to be met, but these should not be a problem, as they will apply in most situations:
The party must be open to all staff;
In calculating whether the cost of the party has exceeded the £150 per person limit, you need to include other related costs such as taxis, overnight accommodation and also VAT. If spouses/partners are attending, then they also have a £150 allowance.
There is a small trap for the unwary, because the £150 limit applies to the total annual cost per person of all staff social functions during the year and you therefore need to take account of other functions, such as the office summer barbecue. So be careful if you party regularly!
As an alternative to a Christmas party, some businesses give a bottle of wine or a turkey to their staff at Christmas. In the past, the Revenue would normally seek to impose a tax liability on such gifts. However, they have now adopted a more pragmatic approach and will allow this, providing the gift does not exceed typically £25 per employee. Unfortunately a case of wine or a food hamper is likely to be viewed as being too generous in the eyes of the Revenue. In this situation, you should deal with the tax implications, otherwise your employees could end up with a tax bill, which is a Christmas present they will not thank you for!