Bah humbug - the do's and don'ts when planning office Christmas Parties

30th November 2015 by Fiona Hotston Moore

As employees minds turn to the social highlight of the office calendar and the opportunity to let their hair down - “The Christmas Party” – it’s worth employers just taking a bit of time to plan ahead. Aside from the potential damage to employees reputations and the embarrassment that can follow drunken debauchery there are both HR and tax pitfalls for bosses.

How to ensure the tax man doesn’t get an unexpected gift from your Christmas Party

The employer has the thankless task first of deciding what is an appropriate budget for the Christmas Party such that the business is neither perceived to be stingy nor profligate.
However, in determining that budget the employer needs to be mindful of the tax rules applying to staff parties. There is an annual limit of £150 per employee which an employer can spend and avoid a tax charge on the employee.
In brief the rules are:

  • If the limit is exceeded the full sum (not just the excess) is treated as a taxable benefit and, if the employee is not to receive an unwelcome tax bill, the employer will need to gross it up and pay tax and national insurance.
  • The £150 per head must include food and drink inclusive of VAT as well as any hotel bill and travel costs. 
  • The £150 allowance applies per guest if an employee can bring a member of their family or household.
  • The annual limit applies to all parties during the year.  If two or more parties are held no tax charge arises providing the total is less than £150.
  • All employees at a location must be invited.
  • There is also a further annual  exemption for seasonal or birthday gifts deemed to be “trivial”, which is interpreted in practice to be£50.
  • VAT on staff entertaining can be reclaimed but not the VAT relating to their guests so an apportionment may be necessary.

Avoiding the HR pitfalls of the Christmas Bash

Unfortunately office parties can be followed by HR disasters. It is worth considering the following guidelines to ensure you don’t spend the start of the New Year dealing with the fall out:

  • Decide who in management is going to be responsible on the evening for supervising the event and, for example, dealing with getting an inebriated employee home safely, deciding when to stop serving alcohol to someone or dealing with unacceptable behaviour.
  • Consider issuing an email to staff beforehand reminding them to enjoy the evening but that the normal staff policies apply to an office function such that bullying, misconduct and harassment will not be tolerated. Remind them not to drink and drive and to ensure they and their colleagues have arrangements to get home safely. It might also be sensible to remind staff about courteous use of photos on social media.
  • Whilst the boss is probably equally keen to let their hair down they do of course need to lead by example.

Employees guidance

Finally, The Institute of Leadership and Management recently issued do’s and don’ts for employees based on a survey of bosses:
Do’s:

  • Enjoy yourself. 
  • Mix with other employees from outside your team.
  • Discuss personal  interests (not work).
  • Dance.
  • Network with the bosses!

Don’ts:

  • Be rude to your colleagues or shout at the boss.
  • Reveal your colleagues secrets.
  • Get drunk. 
  • Remove articles of clothing (yours or a colleagues..).

HAVE A VERY HAPPY CHRISTMAS!


Author

Fiona Hotston Moore

Fiona Hotston Moore

Partner
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