The latest issue of the face of Windermere & Kendal has an article about tax and Christmas, written by me.
The online version of the magazine is available here. And if you’re stuck for a gift for the man in your life look at Bedroom Athletics on pages 20 and 21. And for something completely different, my article is shown below!

At this time of year, with January tax bills just over the horizon, it’s difficult not to think of HM Revenue & Customs (HMRC) as Scrooge rather than Father Christmas, but even HMRC shows a little Christmas spirit by allowing tax relief on Christmas parties for employees and sometimes even for the business owners themselves.
Not surprisingly the rules are complicated and if you’re self employed, as opposed to being a director of your own limited company, your party dinner will not qualify for tax relief.
In very simple terms there is an exemption from tax and National Insurance if you provide a party which meets three conditions:
- it’s an annual event
- the event is open to all of your employees
- the cost per head of the event isn’t more than £150
And, because HMRC refers to an “annual event” it doesn’t have to be a Christmas party. It could be a summer barbeque. Better still, if you want to hold a Christmas party and a summer barbeque, provided the combined cost of both events is no more than £150, the exemption still applies.
Spouses and partners may also attend and the £150 exemption is per head not per couple. VAT can be reclaimed on the cost for staff but not for spouses and partners.
For those bosses who are truly entering the festive spirit, they should remember that trivial seasonal gifts are also “tax free”. HMRC‘s advice is:
An employer may provide employees with a seasonal gift, such as a turkey, an ordinary bottle of wine or a box of chocolates at Christmas. All of these gifts can be treated as trivial benefits.
Sadly Scrooge may be the right image for HMRC after all because “If the gift extends beyond one of the items mentioned above, for example from a bottle or two to a case of wine, or from a turkey to a Christmas hamper” it may not be trivial and therefore taxable.
Bah humbug.