Tax treatment of staff events and gifts

As the 2022 festive season approaches employers are likely to be planning more employee events than they did in the past two years. Such events and the giving of Christmas gifts to staff have employment tax implications that need to be considered in addition to VAT and business tax consequences.

In this article we focus on events that have the purpose of entertaining and rewarding employees at Christmas and seasonal gifts to staff made by their employers. If the purpose of an event is different; for example the purpose is to entertain clients and other business contacts and/or seasonal gifts are made to individuals who are not employed by the employer or to business contacts and employees of other organisations different rules can apply which are not covered in this article.

Statutory references are to ITEPA 2003 ...