The 2020 Update:
It’s virtually Christmas but what a different one it’ll be this year. As office parties will be off the agenda HMRC have confirmed that:
“Festive events for staff will be different during the pandemic, so we’re confirming today that this exemption will also apply to the costs associated with virtual parties – including gifts for consumption at the party.”
So follow these simple rules (applicable to Limited Companies only) to make sure that your Christmas Party is allowable for Tax:
- The party or event needs to be open to all employees
- It is an annual occurrence but doesn’t have to be at Christmas
- It doesn’t cost more than £150 per head
If you meet the above criteria then it is allowable for tax without any Benefit in Kind implications.
However BEWARE ..
- This is not a licence to put through the accounts a flat rate of £150
- If the cost is a penny over £150 then all of it is taxed as a benefit in kind!
- The £150 includes vat
- You can have more than one event but the £150 is reduced proportionately
- Like all business costs you must have a receipt for the amount spent
- The event must be for all employees and not just directors – except where the director is the only employee
The amount spent up to the limit of £150 is for each employee. So that doesn’t mean that you can take your friends or family out for a slap up meal either!
However it does mean that if you are a director and employee of your own company then you can have yourself a Christmas meal on the company!