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Tax on Christmas gifts for staff

Russell Finn explains the tax rules around Christmas parties and presents for staff.

Small gifts are allowable, but larger presents may be subject to tax (Picture: iStock)
Small gifts are allowable, but larger presents may be subject to tax (Picture: iStock)

At Christmas you may want to reward the practice staff with some Christmas gifts or a party. However you will always want to make sure that any events do not lead to further tax consequences.

Christmas parties

Parties for example, have a tax-free allowance of £150 per employee for through out the year (for example a summer BBQ, team bonding and the Christmas party). But when you consider that this includes all your events food, drink, travel and hotel accommodation this can all add up.

If you spend beyond this then the benefit will have to be reported on form P11D – this would be the value of the smallest event that took you over the £150 limit. The employee and practice will then be subject to further income tax and national insurance.

Also these events must be open to all employees in order to gain a tax deduction in the practice accounts. If an event was only open to GP partners then this would not be an allowable deduction.

Christmas gifts

In terms of gifts, small gifts such as a box of Christmas biscuits, a bottle of wine or even a Christmas turkey will be allowable.

However something like a full festive hamper would be assessable as a ‘non cash benefit’ and the employee and practice subject to further income tax and national insurance.

Where a retail voucher or bonus is given these are treated as regular pay and taxed in the usual way.

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