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Tax-Free Christmas Gift Ideas for Employees

On the first day of Christmas, I gave my employee… The countdown is on. With the big day drawing near, there’s the not-so-small subject of Christmas shopping to think about. This year, have you thought about a gift for your employees? If so, treating them to something special could be just the trick to end […]

By Emma Tait-Barber on 07 Dec 2020
Read time: 3 minutes

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On the first day of Christmas, I gave my employee…

The countdown is on. With the big day drawing near, there’s the not-so-small subject of Christmas shopping to think about. This year, have you thought about a gift for your employees? If so, treating them to something special could be just the trick to end 2020 on a high. And the good news is it doesn’t have to break the bank.

Thanks to trivial benefits and allowable expenses claimed through your limited company, you can make Christmas special this year and save money. So make sure your team are on your nice list.

Reminder: What is a trivial benefit?

From time to time, you can provide your employees with perks and claim them as tax-deductible items if they meet the following criteria:

  • You spent £50 or less per employee
  • You didn’t give a cash gift
  • You’re not rewarding a work performance
  • If the gift is to yourself as owner and director, or an employee who is a family member you don’t provide more than £300 of benefits per year
  • The benefit isn’t outlined in the employee’s contract

While you probably can’t find a partridge in a pear tree for less than £50 (a partridge would probably set you back about £100 – we checked), there are plenty of other gifts to thank your employees for a good year. If you’re stuck for inspiration, we’ve got a couple of ideas which might go down a treat.

A Christmas hamper

A festive hamper stuffed full of Christmas goodies can be shared around the table and enjoyed on the big day is a good way to show your appreciation and give something useful.

Gift vouchers

Why not let your employees choose what they want. Gift vouchers are always a popular choice, and if you’re stuck for something to appease everyone, One4all could be just what you’re looking for. Please remember the voucher must not be exchangeable for cash, if it is this will form a taxable benefit.

A Christmas party

Each year, a company can spend up to £150 per head on employee events. So if you’re planning a festive shindig – and it’s the only event you’ll be having during the year – the good news is that you have £150 to spend per head. Employees can bring a guest along who would also have an allowance of up to £150. The caveat on this being that all employees must be invited to the event and all employee’s must have the opportunity to invite a guest.

This is great news if you’re a limited company director who is the only employee of your company, as you and a guest can enjoy the festivities and celebrate your year’s successes.

HMRC has confirmed for 2020 that virtual events will benefit from the same tax treatment, provided they meet the above criteria. This could be a virtual lunch with the team, or how about a cocktail making class, wreath making class or a cooking class – could come in handy with all the leftover turkey!

Donations to charity

Feeling generous this year? You can make donations from the business to registered UK charities. Find out more in our handy guide to charity and sponsorship expenses.

Join the discussion

What are you treating your employees to this Christmas? Whether you’re taking one of our suggestions or you’ve got an idea of your own, join the conversation on Twitter and let us know.

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