Christmas Party Allowances
Christmas Party Allowances - Small Business - Wurkplace Blog

Christmas Party Allowances

Unwrapping the Law of Christmas Gifts: A Jolly Guide for Employers


The festive season is upon us, and with it comes the delightful tradition of exchanging Christmas gifts. As an employer, it’s important to understand the legalities surrounding employee and customer gifts, as well as the rules for Christmas party allowances. So, grab your Santa hat and let’s dive into the merry world of gift-giving under UK law!


The Law of Christmas Gifts for Employees:


As an employer, you can spread some holiday cheer by giving Christmas gifts to your employees. The good news is that these gifts can be considered tax-free, as long as they meet certain conditions. To avoid any “Bah, humbug!” moments, remember:

The gift must not be cash or a cash voucher. Consider something more personal, like a festive hamper or a fun company-branded item.

The cost of the gift should not exceed £50. However, if you’re feeling extra generous, keep in mind that any excess amount will be subject to income tax and National Insurance contributions.

Christmas Party Allowance Per Person:

Nothing says “ho ho ho” like a memorable Christmas party for your employees. And the best part? You can claim tax relief for the costs incurred, as long as you follow these guidelines:

The party must be an annual event open to all employees.

The cost per person, including VAT, should not exceed £150. But don’t worry, this limit covers not only the party venue and food, but also any entertainment or transport expenses.


Spreading Festive Joy to Customers:


While giving gifts to your valued customers is a wonderful gesture, it’s important to understand that the rules differ slightly. Here’s how to navigate the gift-giving sleigh ride:

Customer gifts can be tax-deductible, as long as they are not excessive or overly lavish. Think of thoughtful and modest gifts that show your appreciation, without breaking the bank.

Ensure the gifts are given to customers in the ordinary course of your business. For example, if you’re a retailer, offering a small token of thanks with a purchase is perfectly acceptable.


How to Explain to HMRC:

If HMRC decides to slide down your chimney for a visit, it’s crucial to keep accurate records and explain your Christmas gifting activities. Make sure you:


– Keep detailed records of the gifts given to employees and customers.

– Clearly explain the purpose and nature of the gifts when reporting to HMRC. Again click Here for Help from the HMRC

– Seek professional advice if you’re unsure about any tax implications.



‘Tis the season to be jolly, and understanding the law of Christmas gifts as an employer can ensure a smooth sleigh ride through the holiday season. Remember, a touch of humour and thoughtfulness go a long way in spreading festive cheer while staying on the right side of the law. So, go forth, be merry, and may your workplace be filled with joy and laughter this Christmas!


Disclaimer: This blog is for informational purposes only and should not be considered legal advice. It’s always recommended to consult with a qualified professional for specific legal guidance. Happy holidays from Wurkplace!

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