The 2020 Christmas season is certainly going to look a bit different. Big office parties might be off the list of festivities but it’s still important to reward employees and recognise their contribution in this most challenging of years.

Businesses and employees are both experiencing a very different and difficult lead up to Christmas. A gift received from your company boosts morale and shows appreciation whether you manage a small local team or hundreds of people across widespread locations. Despite some people wanting to write off 2020 and forget about Christmas altogether, it’s very much appreciated if you can keep some Christmas traditions going, putting budget worries aside and create a low-cost way to show you care.

2020 is perhaps the year to cast aside the stereotypical corporate gifts and send a more thoughtful and useful present instead. Just bear in mind the cost of shipping to individuals. There are many companies out there that will put together creative gift boxes around wellbeing, exercise, working from home, recipe ingredients or even coffee.

Tax implications of Christmas treats

A cash gift or cash vouchers paid to employees as a bonus are taxable along with other income via the payroll or their P11D.

Whereas trivial gifts such as a turkey, an ordinary bottle of wine or a Christmas hamper with a value of less than £50 are not taxable. These Benefit in Kind (BiK) gifts must also:

  • Not be part of a contractual obligation like a salary sacrifice scheme
  • Not be provided in recognition for services as part of their role

If the cost of the gift exceeds £50, income tax and potentially NIC will be due on the whole value of the item under the usual Benefit in Kind rules. If you want to give a more expensive gift, it’s possible for the employer to settle any tax and NIC on behalf of their employees via a PAYE Settlement Agreement, or by “grossing up” through the payroll.

To understand the ins and outs of Christmas expenses and plan your costs better, speak to an expert at CRM on 01865 379272.

Sage Accountant Partner Logoiris kashflowFreeagent