Company Xmas Gifts And Xmas Parties

samjocky

Hi

I am the Director of a Ltd Co and the only employee of it too. I have a Secretary (who I do not pay as he is my OH). Am I able to give him a Xmas gift, chargeable to my company? If so, what is the limit for this? My next question is the Xmas Party. Am I able to claim "per head" for a Xmas party for myself and him? Again, if so what is the amount please?

(I know this probably makes me sound like Scrooge but I have never done it before and yet I have heard it may be possible!) Thanks x

Bean_Counter

samjocky wrote: »

Hi

I am the Director of a Ltd Co and the only employee of it too. I have a Secretary (who I do not pay as he is my OH). Am I able to give him a Xmas gift, chargeable to my company? If so, what is the limit for this? My next question is the Xmas Party. Am I able to claim "per head" for a Xmas party for myself and him? Again, if so what is the amount please?

(I know this probably makes me sound like Scrooge but I have never done it before and yet I have heard it may be possible!) Thanks x

Hi,

Since not at work, I can't remember the exact rules on gifts. Anything such as cash or vouchers that could be turned into cash would probably be subject to a tax charge and best avoided.

For the Christmas 'party', you are entitled to a maximum of £150 each person. Points to note on this are:

1. £150 must be total cost (including VAT)
2. £150 is actually an annual limit, so think if you have claimed for any other 'staff parties' for the two of you during the year
3. Since you have no other employees, then the parts about it must be made available to everyone doesn't apply

I check on other points when back at work (memory permitting.)

olly300

samjocky wrote: »

Hi

I am the Director of a Ltd Co and the only employee of it too. I have a Secretary (who I do not pay as he is my OH). Am I able to give him a Xmas gift, chargeable to my company? If so, what is the limit for this? My next question is the Xmas Party. Am I able to claim "per head" for a Xmas party for myself and him? Again, if so what is the amount please?

(I know this probably makes me sound like Scrooge but I have never done it before and yet I have heard it may be possible!) Thanks x

You can only buy employees who you pay a salarly to, that's yourself, a gift. So you can buy yourself a nice bottle of wine, turkey, christmas pudding etc. There is no limit to the amount but it should be reasonable so buying a £30 bottle of champagne, a £20 christmas turkey or a £15 Christmas pudding won't raise HMRC eyebrows but buying a £100 Christmas hamper may cause hassle. So you can't buy your OH a gift as you don't pay him a salarly.

You can have at company events for your employees that you pay a salarly to and they can bring a guest. The maximum is £150 a head. The advice I've received to this is not to have more than 2 events per year.

The other advice I've received for both of them is put them in your minutes, keep all receipts and the event should only take place in the UK. If you go over the £150 a head it gets taxed as a benefit in kind.

Bean_Counter

olly300 wrote: »

You can only buy employees who you pay a salarly to, that's yourself, a gift. So you can buy yourself a nice bottle of wine, turkey, christmas pudding etc. There is no limit to the amount but it should be reasonable so buying a £30 bottle of champagne, a £20 christmas turkey or a £15 Christmas pudding won't raise HMRC eyebrows but buying a £100 Christmas hamper may cause hassle.

I wasn't aware of any de minimum level for this type of expense. According to this HMRC link, it is a P11DF benefit. I know in many places this is covered by a dispensation, which might explain why you have not been taxed on these type of expenses in the past.

Here is also an HMRC link for Christmas parties.

olly300

Bean_Counter wrote: »

I wasn't aware of any de minimum level for this type of expense. According to this HMRC link, it is a P11DF benefit. I know in many places this is covered by a dispensation, which might explain why you have not been taxed on these type of expenses in the past.

Here is also an HMRC link for Christmas parties.

"Trivial gifts" don't need to be declared on a P11D see http://www.hmrc.gov.uk/guidance/480.pdf page 11

There is no minimum spend you can spend £2 if you want but the way the question was asked indicated to me that the questioner wanted to spend a bit on the gift. I was also just giving examples of things I know myself and other people have received as Christmas presents while in permanent employment.

Obviously if you are bulk buying for a few hundred or thousand people while the overall cost is a lot, you would be able to haggle down the price of each individual item.

This also makes interesting reading: http://news.bbc.co.uk/1/hi/business/3345859.stm

Most importantly anything you do i.e. buying a gift or having a christmas event must be repeated in subsequent years.

LittleVoice

olly300 wrote: »

Most importantly anything you do i.e. buying a gift or having a christmas event must be repeated in subsequent years.

This is surprising. Have I misunderstood?

If in year 1 the company is doing really well and the company directors feel comfortable in paying for a party at the top end of the possible, cannot they not decide in year 2 to give only a £5 Christmas pudding - because profits have fallen substantially?

Are you saying the taxman would insist the company spend money on gifts which it can ill afford?

Murdina

I don't agree with this. The rule whereby parties are not taxed as benefits certainly does not require that you hold them every year. As for gifts if you own the company - well maybe you can prove they "drop out" because you are an employee but there are tax rules which can treat benefits as a deemed dividend. HMRC has taken a conscious decision to be reasonable where for example turkeys are given to staff but strictly in law such items are taxable as a benefit. If you are the owner/shareholder and are seen to be pushing that concession then they will not allow it to you and are within their rights to do so, since it is just that.

olly300

LittleVoice wrote: »

This is surprising. Have I misunderstood?

If in year 1 the company is doing really well and the company directors feel comfortable in paying for a party at the top end of the possible, cannot they not decide in year 2 to give only a £5 Christmas pudding - because profits have fallen substantially?

Are you saying the taxman would insist the company spend money on gifts which it can ill afford?

Nope.

The taxman stress the word "annual" as if you have a party one year and have the same/higher profit the next year and don't have a party you are obviously taking the p!ss.

If your profit is reduced in year two then giving out a £5 Christmas pudding isn't taking the p!ss especially if it's recorded in your board minutes.

olly300

Murdina wrote: »

I don't agree with this.

Yep there are lots in the tax system people don't agree with.

Murdina wrote: »

I
The rule whereby parties are not taxed as benefits certainly does not require that you hold them every year.

The taxman's guidance stresses the word "annual"

Read the pdf from HMRC: http://www.hmrc.gov.uk/guidance/480.pdf

Murdina wrote: »

As for gifts if you own the company - well maybe you can prove they "drop out" because you are an employee but there are tax rules which can treat benefits as a deemed dividend. HMRC has taken a conscious decision to be reasonable where for example turkeys are given to staff but strictly in law such items are taxable as a benefit. If you are the owner/shareholder and are seen to be pushing that concession then they will not allow it to you and are within their rights to do so, since it is just that.

Again read the pdf from HMRC: http://www.hmrc.gov.uk/guidance/480.pdf

"Trivial" is obviously open to interpretation and would depend on your company's profit. And I mentioned in my original post the gifts I know people have received at Christmas from other employers as employees.

Murdina

When I say I disagree, I mean on technical grounds, not morally. I spent several years completing P11Ds (and I'm also an ex HMIT) and I do not think that HMRC would ever deny relief for an annual party on the basis a) that it had not happened before or b) because the company fell on hard times and could not give one the following year.
As to trivial, look at http://www.hmrc.gov.uk/manuals/eimanual/EIM21863.htm
The point I was also making is that owners of companies are not just taxed as employees, so benefits can be caught in other ways. The legislation used to be at s 418 ICTA 1988 but may have been updated in the tax law rewrite. I would not counsel anyone who owns their own company to push their luck with regard to giving themselves gifts from that company, no matter how trivial. As to what you see others getting, employers can enter into PAYE settlement agreements for their employees which may mask to the employee that the gift or entertainment carried a tax benefit. I have seen these used for what many would consider to be most generous "freebies" for employees. See http://www.hmrc.gov.uk/guidance/paye-settlements.htm