Christmas Expenses: Answers to the Questions Small Businesses Ask Most
Christmas Expenses
Answers to the Questions Small Businesses Ask Most
Christmas creates a mix of celebration and admin for many business owners trying to stay on the right side of HMRC. Here is a short guide to the questions we hear most often at PJE Accountants and Advisors.
Are staff Christmas parties tax deductible?
Usually yes, as long as the event meets the annual party exemption.
To qualify:
It must be open to all employees
It must be an annual event
The total cost must not exceed £150 per head including VAT, accommodation and transport
If all conditions are met, there is no taxable benefit for employees and the cost is deductible for corporation tax.
What about client entertaining?
Client entertainment is not tax deductible. The cost can still be paid through the business, but it cannot reduce taxable profit. This includes meals, drinks, tickets and hospitality.
Can I buy staff Christmas gifts?
Yes, as long as they fall under the trivial benefit rules.
To qualify as a trivial benefit:
It must cost £50 or less per person
It cannot be cash or a cash voucher
It cannot be a reward for work
It should not be part of salary sacrifice arrangements
Gifts such as hampers, chocolates and wine usually qualify.
Can I give directors trivial benefits too?
Yes. For directors of close companies, trivial benefits are capped at £300 per tax year. Each individual gift must still be £50 or less.
Are Christmas bonuses treated differently?
Cash bonuses are always taxable and subject to PAYE and National Insurance. They do not fall under trivial benefit rules.
At PJE, we work closely with our clients throughout the year to make sure decisions around Christmas spending are both enjoyable and tax efficient. Our team helps assess staff events, assess the tax treatment of gifts, manage VAT correctly and avoid unwelcome surprises from HMRC.
If you are unsure how the festive rules apply to your business, our advisors are ready to guide you with practical, personalised support. Feel free to get in touch with your local PJE office or your usual contact
Posted - 12 December 2025