Parties & Gifts for Staff
The festive season is fast approaching & lots of employers will be organising parties or gifts for their hard-working staff. If employers stick within the rules, these can be tax & National Insurance (NI) free but as ever with tax, nothing is ever simple! Below is a handy reminder of the rules:
To be exempt from tax & NI, the party or similar social function must:
• be open to all employees
• be annual, such as a Christmas party or summer barbecue
• cost £150 or less per person (the cost per head can include non-employees, for example if employees are allowed to bring a “plus-one”)
In view of the on-going coronavirus situation, HM Revenue & Customs have confirmed that this also applies to online or virtual parties.
If a business has more than one location, an annual event that’s open to all of the staff based at one location will meet the “be open to all employees” requirement. It is also permissible to organise separate parties for different departments within the organisation, as long as all employees are given the chance to attend one of them.
If there are multiple annual events, they will still fall within the exemption if the combined cost of the events is no more than £150 per head.
Gifts given to employees can be free of tax & NI if all of the following conditions are met:
• the gift cost £50 or less to provide
• it is not cash or a cash voucher (a “cash voucher” is a voucher that can be exchanged for cash.)
• it is not a reward for the employee’s work or performance
• it is not contractual