Chirstmas Bonus and Staff Gifts

I want to give a Christmas bonus to my staff. are they allowable?

How generous of you! The answer can be yes.

To make staff gifts an allowable expense, the cash (or the cash equivalent) will have to go through payroll, upon which the employees are taxed and you will pay Employers NI

So:

If you were to give a cash bonus (or voucher or cash equivalent) of £100.

? The £100 goes into payroll as an extra on the employee's gross salary
? Depending on whether the Employee earns enough to pay tax, at basic rate
? they will receive £69 extra (20% PAYE and 11% Employee's NI) net pay
? This will cost you £112 (with the extra £12 being payable as Employers NI
? You will receive tax allowance of £22.40 (at basic rate) or £40 (at higher rate)

What about small gifts? Do they follow the same rules as above?

Seasonal gifts or trivial benefits will be tax allowable and do not necessarily need to be reported.

"An employer may provide employees with a seasonal gift, such as a turkey, an ordinary bottle of wine or a box of chocolates at Christmas. All of these gifts can be treated as trivial benefits."
The word "trivial" is given by HMRC but not defined with a limit. Generally you can peg for below £50, but again, this does not mean it is not trivial.
When a bottle of wine or 2 turns into a case, and a turkey turns into a hamper, this is no longer deemed as trivial and will become tax and NI-able.

STAFF PARTIES

I want a massive Christmas party this year for my staff - is this ok?

Yes, but following rules must apply in order for the expense to be allowable:

? The event is open to all employees
? Cost per head isn't more than £150 per employee

What about if I had a staff party back in the summer?

That's fine, so long as the total cost of the two parties must not exceed £150 per head.

If the total is more than £150, either one of the parties can be allowable, but not both. This means that one of the parties will be tax and NI-able (an employee benefit)

I have invited the employee's partners - are they allowable?

Yes - so long as the combined average cost per head (employee + partner) does not exceed £150 for the year. The partner should be included in the head count when calculating the average cost per head.