Staff Christmas Parties and Bonuses

£150 Exemption extended to Online Parties

The £150 per head exemption for staff Christmas parties has been extended to include virtual parties. This is a useful change with most employers looking to hold annual celebrations on Zoom or similar online events. This is an exemption, not an allowance, if exceeded the whole amount will be taxable. The event must be offered to all employees.

HMRC provide a new example :

"A company holds one annual function in a tax year and does so virtually using IT. All employees are invited and each is provided with a hamper consisting of some food and drink to be enjoyed by the attendees during the party. The total cost per head is £100 which is within the £150 exemption and so the exemption applies."

Trivial benefits

Remember there is also an exemption for trivial benefits of £50 or less per time, non-cash e.g. gift vouchers.  This must not be contractual or for specific work done and there is an annual limit of £300 for directors.

Cash bonus

If you pay your employee a cash bonus this is subject to tax, national insurance and in some cases may reduce an employee's universal credit, so vouchers and parties are a good way to reward staff.