HMRC can help pay your bar bill at this year’s Christmas Party!

HMRC may not seem like the jolliest of organisations but what allowances do they give you for your Christmas Party?

Usually, business entertainment is not allowable for a tax deduction. However, you are allowed an annual total of £150 per head for annual team events. Not only can your business claim this as a tax deductible expense but your team will not suffer any benefit in kind tax charges either.

To make your team Christmas Party an allowable expense, you must ensure that:

  •  The total cost, including costs for transport and accommodation must not exceed £150 including VAT per head, per tax year
  • Your whole team are invited to the event

Bah Humbug
As you may expect from HMRC there are certain criteria you will have to meet before you can claim the costs as a tax deductible expense though:

  • The cost of £150 per head includes all of the annual events you hold so if you hold a summer BBQ which costs £50 per head you are only left with £100 per head for any other events during the year!
  • Any special ‘one off’ events are not included!
  • If the costs of your events exceed £150 then the employees will be charged for the full costs of the events as a benefit through their salary. If, for example, the cost of your annual events came to £180 per head, your employees will be taxed on the full benefit of £180 not the £30 difference. Be careful with your receipts here!
  • The allowance of £150 per head is only available for attendees of the event so if any of your team decide not to attend you will not be able to use their allowance at the bar!

Merry Christmas
Watching the bills is all very doom and gloom for a Christmas party we know but we have been careful to say ‘£150 per head’ throughout this article.

Let’s say you have a team of 5 who bring a partner to the event, there are now 10 heads attending meaning you can spend up to £1,500 on your Christmas party which, if you pay Corporation Tax at 20%, is £300 off your tax bill.

For a team of 15 bringing a partner that’s a total spend of £4,500 which will see a tax deduction of £900!

Merry Christmas indeed!

2014-02-21T15:07:18+00:00