Have a Great Christmas Party With Help from HMRC

Once again, Christmas is almost upon us. After a disruptive 2021 and a very quiet Christmas 2020, many businesses are planning a major celebration for their employees.

It is the perfect way to bring your employees together and thank them for all their hard work as well as re-build the team spirit which has been dampened by enforced home working.

However, as business owners, MDs and CEOs, we still need to manage the finances. Thankfully, help is at hand from HMRC.

Annual events like Christmas parties enjoy a festive tax exemption. Let me explain:

The cost of Christmas parties are a deductible expense for your business. This means that it does not count as a benefit in kind for employees IF the following criteria are met:

• The party is an annual event

• The party is open to all staff. Businesses with multiple offices can have separate parties at each office but they must be open to all staff at those offices.

• The VAT-inclusive cost is no more than £150 per person attending. This includes guests that employees bring along, such as their partners. If the cost exceeds this limit, then the whole cost becomes a benefit in kind, not just the overspend.

Note that the exemption does not just only apply to Christmas parties. You can use this this allowance for other annual events. However, the £150 per person applies to all events in a single tax year.

So, you can organise a great party for your employees while minimising cost using this little-know allowance.

If you need help or any sort of advice regarding tax and accounting, we provide all year round support to all our clients. Remember tax advice is not just for Christmas! If you want to make use of our service, you are invited to contact us at 01892 807001.