Tax-efficient ways to reward your team

Over the last year, businesses and their teams have had to adjust to new ways of working, the introduction of brand-new words to their vocabulary (where did furlough come from?) and most difficult of all, missing out on the chance to catch up with workmates face-to-face, instead of constantly reminding each other that they’re on mute.


That’s why it’s important to bring people together and thank them for all their hard work. Whether it be a summer party to kick things off or a small gift to say thank you, and even better, there are a number of tax-efficient ways you can reward your team.

A summer party for staff

Growing in popularity with businesses recently has been summer parties. These can take the shape of a company BBQ, sports day or day out to take on an exciting activity. Summer parties are always a hit with our team and there are plenty of fun themes that you can use to plan your party around, such as the Olympics or the Proms.

These parties can have a tax-free benefit too, as long as they follow these simple rules:

Remember the magic figure – £150

The total cost of the party must not exceed £150 per head, per year, which includes VAT and any transportation or accommodation costs. It’s also a limit, not an allowance, meaning if the cost for the event is £151 per head, then the whole amount becomes taxable!

It’s an annual tax limit – so plan carefully

The annual amount will need to form part of your decision making for the entire year as it will impact any additional events you plan during that period.

The good news is that you can apply this annual amount to any event or events you want, as long as they don’t go above this allocation. For example, let’s say you plan on holding 3 events for your team during the year, with the following costs:

  • Easter Team Building (£45)
  • Summer BBQ (£100)
  • Christmas Party (£140)

You can apply the annual amount against the Easter Team Building and Summer BBQ events (£45 + £100 = £145) or use it solely for the Christmas Party.

Everyone is welcome

These events do need to be open to all employees, or, if your company has various branches, open to the people within a certain location. Any planned party cannot be exclusive to employees in a particular department or directors, the only caveat being if your company is only made up entirely of directors.

If you’re not going to be able to plan a party in time then there’s still plenty of tax-efficient ways to reward your staff this summer.

Tax-free gifts to say thank you

A small gift to say thank you can go a long way and can include things like flowers, a box of chocolates or a bottle of wine.

These types of gifts won’t cause any tax implications for your company as long it follows these simple rules:

  • It costs £50 or less
  • It isn’t cash or a cash voucher
  • It isn’t related to an employee’s performance
  • It isn’t in the terms of an employee’s contract

As with the limit on the summer party mentioned above, the £50 is a limit and any gift that exceeds £50 will see the full value taxable. That will also include any postage, gift wrap or greeting cards that are getting sent with the gift.

How can we help?

There are other creative ways to reward your team and we visit them in more detail on the Rewarding Staff section of our website.

If you’d like to talk it through with us and get some initial advice on the next steps, please give your Client Services Manager a call on 01782 279615.

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