When a work party, a hamper or a seasonal bonus is tax free, and when it shows up on your payslip.
Most festive extras from an employer are perfectly tax free, but not all of them. HMRC treats anything an employer gives you because of your job as a possible taxable benefit. Two long standing rules take most Christmas perks out of tax altogether: the exemption for annual staff parties and the trivial benefits rule. Cash is the big exception, and it is taxed like any other pay.
This guide explains the rules for employees and for small employers planning the festive season. It covers the position for the 2026/27 tax year, which runs from 6 April 2026 to 5 April 2027.
The cost per head is the total cost of the event divided by everyone who attends, including partners and guests. If an employer holds more than one annual event, the £150 can be split between them, for example a summer event and a Christmas party, as long as the combined cost per head stays within the limit.
When a party does go over the limit, employers commonly settle the tax themselves through a PAYE Settlement Agreement with HMRC, so staff do not see an unexpected charge.
A small Christmas gift is usually covered by the trivial benefits rule. A gift counts as trivial, and so is tax free, when all of these apply:
A turkey, a box of chocolates, a bottle of wine or a store gift card are the classic examples. The £50 test applies to each gift, so a gift costing more than £50 is taxable in full.
A cash bonus is earnings. It goes through payroll and has Income Tax and National Insurance taken off in the normal way, and it can push part of that month's pay into a higher band. The same applies to vouchers that can be exchanged for cash. To see what a bonus is worth after deductions, use our bonus tax calculator or read show me the tax on a bonus.
Tax free parties and trivial gifts do not appear on your payslip at all. A taxable gift may be reported by your employer at the end of the tax year, or included in payroll, and can affect your tax code for a later year. A bonus appears as a separate line of pay. If you are unsure what a line means, our guide on how to read your payslip explains each part.
HMRC sets out both exemptions on GOV.UK. Search for "expenses and benefits: social functions" and "expenses and benefits: trivial benefits" for the official guidance, and check anything important with HMRC or a qualified adviser.