How to avoid an expenses headache at Christmas

Santa’s little helper (aka Bernard Crumlish, management accountant at webexpenses) offers his top tips to help accountants keep on top of office expenses this Christmas.

Christmassy expenses accountant
HMRC rules state that an organisation can spend up to £150 per year per person, tax free, on entertaining employees.

Christmas is coming. For many of us, these are three of the most exciting words we’ll hear all year – conjuring up images of tasty Christmas dinners, presents under the tree and the chance to enjoy a cheeky drink or two. However, the truth is, for many, ‘Christmas is coming’ is a very scary statement indeed.

For none more so than for Santa’s accountant crunching the numbers over in Lapland. Imagine having to manage Santa’s travel expenses! Not to mention having to keep an eye on naughty elves who might get a bit too merry on Santa’s expenses account. In many respects Santa’s accountant isn’t all that different from us ordinary accountants managing budgets and expenses over Christmas. Here at webexpenses, we know just how busy finance teams can be.

So, to help you plan a festively fantastic Christmas, here are my top tips to ensure your December goes without a hitch and you avoid an expenses headache in 2016:

  • Have a planned approach

Before you even consider what to do for your Christmas party, or what to buy staff to say thank you, it’s essential you take a planned approach. Begin by working out a budget. Be sure to consider anything you anticipate spending money on; from parties, to gifts, to transport – anything which might have a cost implication. What’s more, make sure staff members in charge of planning Christmas activities are aware of the budget and HMRC guidelines. By sticking to the agreed budget there won’t be a benefit in kind to your employees.

  • Track the spending

Put procedures in place to keep track of your budget and make sure spending is being recorded. Expenses management tools, such as webexpenses, can help you ensure you stick to your budget by offering a real-time overview of your business expenses.

  • Hospitality

No Christmas would be complete without an office party, but when it comes to planning parties, don’t get carried away. HMRC rules state that an organisation can spend up to £150 per year per person, tax free, on entertaining employees. There’s no restriction on the size of business. Whether your workforce numbers 5,000 or just two or three, the same rules apply. However, should you exceed the £150 limit, the whole cost of the event becomes taxable as a benefit in kind and must be reported on each employees’ P11D or paid on behalf of the employee via the employers’ PAYE settlement agreement.

  • Gifts

When it comes to gifts, again have a budget in mind. Make sure you know how much you can afford. Often a small gift is more than enough to show your appreciation. HMRC rules allows businesses to buy ‘trivial’ gifts for employees, which are not cash or vouchers, without tax implications. For example, an ordinary bottle of wine or a box of chocolates are considered trivial. However, a case of fine wines or Christmas hamper is unlikely to be viewed as trivial, and should appear on the employee’s P11d or paid for on behalf of the employee via the employers’ PAYE settlement agreement. HMRC suggests that employers use judgement to determine what is trivial.

  • Remember to enjoy yourself

Christmas is the one time a year that most organisations take a break, so remember to do the same and treat yourself to a mince pie or two.

LIKE THIS? You may also enjoy: How to organise a Christmas party to remember

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