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Tax Tips and Advice for Freelancers and the Self Employed

Virtual 2020 Christmas Tax Allowable Party

 

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!

 

 

Filed Under: 1. All Posts, 1. Top Tip Tagged With: CheapAccounting.co.uk, Tax

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