Christmas Party Tax Relief

Christmas Party Tax ReliefIf you are a limited company director then you probably don’t feel like HMRC gives anything away for free.

However at this time of year there is one benefit available…

The favourable treatment of tax on the annual Christmas party you hold for yourself and your staff!

HMRC Christmas Party Tax Relief

As you will be aware, usually staff entertainment would be considered a ‘Benefit in Kind’ and therefore directors and employees would need to pay tax and NI on the amount of the benefit.

But as a company director you can organise an annual event for yourself, any staff you employ and partners and as long as the cost per person does not exceed £150 (VAT inclusive) the cost is tax deductible.

What’s included?

The cost per head can include

  • transport,
  • accommodation,
  • food & drink
  • entertainment

 

 But must not go over the £150 limit.  It must also be an event available to all staff.

Sadly this is not free cash!

Be aware, this is not an ‘allowance’ and therefore a cost must have been incurred, with the usual rules surrounding receipts and record keeping.  You cannot simply claim £150 in cash!

Split the benefit

If £150 is too much to spend on one event then you can hold several events throughout the year, but the combined total must not exceed the threshold and the rules about all staff being included to all events still apply.

HMRC Christmas Party rules

For more information on the annual parties and other social functions visit, click here (HMRC).

Or for more general information on the type of expenses you can claim through your business visit our Expenses Guide or call us on

01737 652 852

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