The Work Christmas Party... and tax
- Roger Clough
- Nov 11, 2024
- 2 min read
You can put on a Christmas party for your staff without it becoming a Benefit-in-Kind (as in without incurring a tax charge) as long as you keep to a few rules:
Cost:
£150 (including VAT) per head or less
Who must be invited?
All your employees must be invited (it must not be selective)
How often?
It must be an annual event (it doesn’t have to be Christmas, it could be an end of summer season event, but it does need to be once a year).
What if I have locations over the country?
You can put on one big event, or a series of small ones, as long as all staff can attend one of them.
Could we have two smaller events costing £75 per head or less?
Yes, as long as the combined total per head is £150 or less you can have any number of events.
If I’m VAT registered, can I reclaim the VAT on the party?
Yes, you may. However, remember that for the events to be exempt the total cost must be less than £150 including VAT per person attending. Also, you may need to claim only a portion of the VAT if you allowed staff to bring guests, as only the staff element of VAT is recoverable.
What about small businesses with few staff members, can they still claim?
For limited companies, if you are the only director and employee (receiving a payslip under PAYE) you can claim the exemption. For sole traders and partnerships you may only claim it if you have other staff members.
Can I claim the exemption for sub-contractors?
No, they have to be staff employed under PAYE
Can partners be invited too?
You may invite employees’ partners or family members. The £150 allowance applies to them too, so divide the total cost by the number of attendees.
About the author
Dr Roger Clough, founder
Roger has a PhD in UK food retail change, has lectured extensively in business finance and accounting, and has run several businesses over three decades. As an AAT Licensed Accountant he likes to be on a journey with clients rather than the kind of accountant who just prepares the statutory accounts after the year end – meaning that advice can be given and decisions can be made before it is too late.
About Clough Accounting
t 01736 601657
Roger Clough t/a Clough Accounting is an AAT Licensed Accountant
© Clough Accounting, 2024
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