Reward your team this festive season without triggering extra tax:
Christmas Gifts (Trivial Benefits)
- Non-cash gifts up to £50 per employee are tax-free.
- Gifts must not be cash or cash vouchers, not performance-related, and not part of contractual pay.
- No limit on the number of £50 gifts given to employees throughout the year.
- Close companies (broadly 5 or fewer shareholders): max £300 of trivial benefits per director per year, with each gift ≤£50.
Gifts qualifying as trivial benefits are fully tax deductible for the employer and are tax-free on the employee.
Staff Parties
- Annual events are tax-free if cost is ≤£150 per head (including food, drink, entertainment, VAT, and transport) and the event is open to all employees
- Multiple events? The £150 limit applies across all annual events combined.
- Exceed £150 per head? The entire cost becomes taxable as a benefit in kind (which is subject to employer national insurance contributions and chargeable to income tax on the employee), not just the excess.
Note, the cost of staff parties is fully tax deductible for the employer for income tax/corporation tax purposes, even if it exceeds the £150 threshold.
Bonuses
- Cash bonuses and performance-related payments are fully taxable via PAYE/NICs and are likely to be subject to employer and employee pensions contributions, depending on the pension scheme used.
- Non-cash bonuses may be tax-free only if they meet trivial benefit rules.
Any queries please contact one of the team.
Ian Smale
10th December 2025
