There has never been a year like 2020 and we have never seen a festive or Christmas season like this. It is difficult to comprehend that the global epidemic has overtaken traditional norms such as working groups and group lunches. Challenges such as continued uncertainty, social isolation, and closure have made it difficult for businesses to reward their employees with an annual Christmas party or any other event, the uncertainty of taxes surrounding alternatives such as real parties or gift boxes left employers. Confused and cautious. We have announced the good news about the impact of taxes on the Christmas party featured in this article.

Lots of guidelines for keeping and growing your business

Tax Benefit at Annual Event

Prior to COVID 19 businesses often held Christmas events without fear of tax evasion as the HMRC ensured that such annual events were issued on a limited basis, qualifying them as tax-free for employees.

The hosted event must be for all employees and not just directors.

The total cost incurred for such events is no more than £ 150 per person (including VAT).

If you host more than one event a year and the combined cost does not exceed the limit of £ 150.

The allowable limit covers all expenses incurred, including the provision of food, beverages, overnight accommodation (if any), and transportation.

It is noteworthy that exceeding the allowable limit of only £ 1 will be considered by the HMRC and the costs incurred in the event will be a charge, you will no longer be able to recover the VAT included in the costs. Although the law does not address the coercion of persons present, the HMRC further emphasized that the visible parties do not meet the requirements for release as legal allowances. Recently, however, the HMRC announced that the visible parties, if below the cost limit, are experiencing exemption.

Tax benefits of a visible Christmas party

Because of this, many businesses are looking for another way to reward their employees such as Christmas parties, DIY food baskets, or gift discounts.

Small Benefits

The impact of professional income tax services on gifts on employees depends on their nature and is always exempt from tax implications. The gift will not be considered taxable and will only be taxed by national insurance if:

• It’s money like a Christmas bonus or a cash voucher.
• It is provided by appreciating any services the recipient has provided during the hiring period.
• The gift is provided in respect of any contractual agreement.
• Most importantly, if the offer provided exceeds the cost of £ 50 (inclusive of VAT).
• If the gift buyer wants a refund on the cost in case he or she does not have a company credit card.

Businesses may not claim any payments made to their employees during the holidays during the closing period. The only condition that can apply to your business scheme is whether the employee holidays begin before the Christmas season and extend beyond them. However, the recent additions to the release have kept the holiday spirits together this year, albeit under stress and fear.