Christmas expenses 2025: what can you claim?

Hosting the Christmas party

Throwing a seasonal shindig is a great way for you and your team to come together and celebrate everything you’ve accomplished this year. As an employer, you can include the party in your profit and loss statement as a business cost, since staff entertaining is tax deductible. But you may be wondering whether the party would have any tax implications for your team.

Providing “extra perks” for your staff, in addition to their wages, can sometimes be subject to extra tax and National Insurance. If you give staff what are known as “taxable benefits”, such as private medical insurance or a company car, then they will have to pay tax on the value of the benefit, and both you and they may have to pay extra National Insurance. Not all benefits are taxable though, like a company mobile or hot drinks at work.

The good news is that the food, entertainment, equipment and other costs of a Christmas party may not be a taxable benefit, depending on who’s on the invite list and how much you’re spending. In order to avoid the party being a taxable benefit, it must:

• be open to all your employees

• be an annual event

• cost £150 or less per person

All the detailed tax implications for parties are available from HMRC. For more on the tax differences between throwing a party for your staff and a party for your customers, take a look at our guide on business entertainment expenses.

Decking the halls (of your office)

HMRC considers the cost of Christmas decorations to be part of your office expenses, provided your office isn’t in your home. That means tinsel, trinkets and even a Christmas tree can all be logged in your accounts as day-to-day running costs and you can claim tax relief.

Unfortunately, if you work from home, you can’t claim any tax relief on festive decorations, as HMRC will most likely view decorations for your home as items for personal enjoyment rather than business purposes.

Gifts for your customers

If you’re feeling generous and want to buy a present for one of your customers, you need to meet these requirements to be able to claim tax relief on the gift.

• Don’t spend more than £50 per year on gifts for a customer.

• Make sure the gift contains a ‘conspicuous (clearly visible) advert’ for your business.

• Don’t give food, drink, tobacco or vouchers that the customer can exchange for goods or cash.

Wondering whether your gift ideas fit within the rules? HMRC has more information on customer gifting requirements.

Gifts for your team

You may also want to give your team a little something to say thank you for their hard work this year.

If you’d like to give any or all of your employees a small, personal gift that doesn’t have a direct cash value - such as a bobble hat or a bunch of flowers - you might be able to include the purchase as part of your day-to-day running costs, and the employee wouldn’t have to pay tax on the value of the gift, as it would be a trivial benefit.

However, if you choose to give a gift that does have a direct cash value, such as a gift voucher that’s exchangeable for goods or services, you will need to report the value of the voucher on form P11D, and add the cost of it to the employee’s earnings when you work out National Insurance (though not PAYE tax) on what they’ve received.

If you choose to reward your staff with a cash bonus, HMRC will view this in the same way as your employees’ regular earnings and you will need to run the amount through your payroll as normal and deduct the usual tax and NI from its value.

Allowable expenses aren’t just for Christmas - check out our guides to find out more about the small business expenses that are allowable for tax relief all year round. If you’re not already using FreeAgent, give yourself the gift of accounting software you’ll love in 2026 by starting a 30-day free trial.