Tax implications of Christmas Parties and Gifts

Staff Christmas parties are free of tax if the total cost per employee is £150 or less. Above this figure, even if only by £1, then the total amount becomes taxable on the employee, not just the excess. This cost is the total VAT inclusive cost, even if the employer can recover the VAT, and it also includes incidental costs such as travel and accommodation. The employer should simply divide the total cost by the number of attendees, and not the number of employees if this is more.

In addition to the £150 limit, the function should be primarily for entertaining staff, it must be open to all staff, and it should not be just for directors ( unless of course all staff are directors ).

The £150 limit applies to all of the company’s annual functions, so if there is a summer barbeque with a Christmas party, then the £150 limit is spread across both functions.

If you have exceeded these thresholds, then please speak to our office for further advice on reporting the amounts to HMRC.

Christmas Closure

Our office will be closed effectively from Thursday 20th December at 5:00pm. We are having our staff Christmas outing on Friday the 21st, and whilst there may be minimal skeleton staff in the office during the Christmas and New Year period, your usual point of contact may well be absent during this period until after New Year. Staff emails will also not be monitored during this break period.

If there is anything which is urgent, I would strongly recommend that you speak to the office no later than Thursday 20th December.

2018 Tax Returns

This is a reminder to all clients who have not yet sent on to us all the relevant information to prepare the 2017/18 self assessment tax returns.

The deadline for submission of this tax return is 31st January 2019. If a tax return is submitted after this date, then penalties will be incurred. These penalties initially start at £100, irrespective of whether a tax liability arises or not. These penalties increase over time, and from 1st May 2019 a daily penalty rate of £10 per day will be added.

If you have not yet done so, please send all relevant information on to us at the office, without further delay. During January, we will be preparing tax returns for clients on a strict basis of first in first out. If we are unable to prepare and submit the tax return for clients, due to insufficient time, then we have no responsibility whatsoever for any penalties that may be incurred.