AS December 25 looms on the calendar each year I often get asked: Can you give your staff a gift at Christmas, or have a party, tax free?

In general, gifts to employees could well be benefits in kind, and could cost both tax and National Insurance.

However, trivial benefits (an everyday example being the workplace provision of tea and coffee) can be treated as exempt, if agreed with HM Revenue and Customs.

Cash benefits and non-cash vouchers, however small in amount, should not be regarded as trivial. After misinterpretation and speculation in the past, HMRC guidance now states that an employer may provide employees with a seasonal gift, such as a turkey, an ordinary bottle of wine or a box of chocolates at Christmas, and that this may then be treated as a trivial benefit.

If the gift goes beyond this, for example from a bottle or two to a case of wine, or from a turkey to a Christmas hamper, the case will need to be considered in more depth.

With regard to having a party, VAT can be reclaimed if you are entertaining your employees, and the net cost can be claimed against tax too.

And as long as the total cost of annual staff functions is not more than £150 a year (including VAT) for each person attending, there is no benefit in kind either.

So why not embrace the inevitable, and spread some cheer, tax efficiently, with your staff this Christmas!