DON'T get stuffed by the taxman when organising your office Christmas party or giving staff presents, warn accountants.

"Any firms considering giving their staff a taxable benefit this Christmas should set up an arrangement with their HM Revenue & Customs office called a PAYE Settlement Agreement (PSA)," said Julian Smith, a partner at Princecroft Willis.

"This allows businesses to pick up their employees' tax bills and ensures your seasonal goodwill does not turn into festive badwill.

"Stay on the right side of the taxman this Christmas and make sure it's just the turkey - and not you - that gets stuffed."

Princecroft Willis advises the following:

Give small gifts such as turkeys and bottles of wine to staff. While such items are technically taxable benefits, the Revenue says it will not tax small gifts regarded as "trivial." They will, however, tax more valuable gifts such as a hamper or a case of wine.

There is no taxable benefit-in-kind on a Christmas party open to staff where the cost is less than £150 per person attending. If the cost exceeds £150 per head then the whole amount is taxable.

Don't give gifts of cash or vouchers to employees since these are taxable.

Give customers or suppliers gifts which cost less than £50 and carry a conspicuous advertisement for your business. These are tax deductible, which means that diaries and calendars are in but food or drink are out.

"Remember that gifts to charities or similar local organisations are tax deductible so be generous to the less well-off this Christmas," said Mr Smith.

First published: November 7