Annual exemptions for staff at Christmas – options for 2020
This would typically be the time of year that we are turning out attention to organising the Christmas party and other festive celebrations. Given the current social restrictions, these events will be different this year, if held at all.
This is just a reminder that there is an annual exemption available to employers each year for staff social functions and parties, i.e. for events such as Christmas parties or summer barbecues which are open to all employees and the total cost is £150 or less per head.
Where this exemption applies, the cost of the event will be deductible for the employer and additionally, there is no requirement to treat the event as a benefit in kind for your employee nor is there is a requirement to report the cost for example via a PSA (a special tax settlement arrangement with HMRC).
The £150 per head allowance is on an annual basis, not per event. However, should you have multiple recurring annual events in the year (say a summer barbecue and a Christmas party), and the combined cost of these events is less than £150 per head, both will be covered by this exemption. If on the other hand, the combined cost exceeds £150, the exemption may apply to one or neither of the events depending on the specific amounts involved.
An Alternative – Trivial Benefits in Kind
Alternatively, if there will be no big event, the trivial benefit rules could also provide a way to celebrate with the team.
The trivial benefits rules, allow employers to provide small or irregular benefits to their employees where the following conditions apply:
- – it costs £50 or less to provide – this is per gift and can be utilised as many times as you wish throughout the year (with a £300 per annum cap for directors)
- – it isn’t cash or a cash voucher
- – it isn’t a reward for work or performance
- – it isn’t a term in the team member’s contract of employment.
As with the annual events exemption, where the above conditions apply, the cost is deductible for the employer, and it is not treated as a benefit for the employee.
Please get in touch if you have any questions in relation to the above.