Tax-efficient Christmas ideas for your team

Christmas is all about ‘the gift of giving’, but this year, those acts of kindness mean more to your team now than perhaps ever before.

The cost of living crisis has seen prices skyrocket, so we wanted to share some tax-efficient ways you can celebrate Christmas with your team, and bring a smile to their faces in these testing times.

Trivial Benefits

You can give or do something for each of your team members that costs £50 (including VAT) or under per person. HMRC considers it a 'Trivial Benefit'.

It meets the criteria of a Trivial Benefit if:

• it costs you £50 or less to provide
• it isn’t cash or a cash voucher
• it isn’t a reward for their work or performance
• it isn’t in the terms of their contract

This is applicable all year round too. You don’t need to pay tax on this or National Insurance or let HMRC know.

Christmas Hampers

Nothing says Christmas indulgence quite like a luxury food or drink hamper. You could send one out to each team member, and personalise it to include all their favourite drinks and snacks. As long as the hamper comes in at £50 or under including postage and packaging, this is absolutely fine - and again can be considered a Trivial Benefit.

A nice idea is to support some local businesses that are offering hampers or put one together yourself.

Tax-efficient Christmas Parties

If you want to throw an in-person or virtual party, you can claim up to £150 per person each year. If you haven't claimed anything else this year, you can use the full £150 for each team member. Similar to Trivial Benefits, you might not have to report anything to HMRC or pay tax and National Insurance.

Voucher for everyone

If employees are worried about rising prices and how they will afford Christmas, a voucher as part of trivial benefits could help them with their Christmas costs. If you'd like to give each member of your team a voucher, this is allowed as long as each voucher is £50 or under (including any postage and packaging if applicable) and it can't be exchanged for cash.

Some ideas:

• Supporting a local business offering vouchers
• Something to contribute towards their family celebrations
• A treat for employees to spend on themselves and their wellbeing

You can do this as many times as you like throughout the tax year.

Things to consider

• Directors are eligible to receive the same £50 trivial benefits as long as the total throughout a tax year does not exceed £300 (this £300 limit does not apply to employees)
• If it costs more than £50 per item, the whole amount becomes taxable
• Has to be a 'just because' - can't be a reward or contractual
• The £150 per team member at events is for each person who actually attends the event or party

Like to know more? Chat with Natalie, our tax specialist on 0345 201 1580 or tax@thewowcompany.com.