The countdown to Christmas has truly begun and even the taxman has a festive nature, by allowing Christmas parties to be tax deductible! However, there are some rules that you must adhere to in order to get the Christmas party started!
1. The party or event needs to be open to all employees. Non employees can attend but you cannot claim for their cost.
2. It doesn’t cost more than £150 per head (as soon as it’s £150.01 the whole party is taxed!) including VAT.
3. You haven’t used up the allowance on an event earlier on in the year e.g. a summer BBQ.
4. You have a receipt for the cost
5. It’s an annual event. You can spread the £150 across two annual events (summer BBQ and Christmas party), just don’t go over £150 in total.
This exemption can cover all aspects of the party including venue, food, drink and even travel!
In addition, if you’re feeling really generous this Christmas you can also give small gifts to your business partners or employees, however the taxman has also put some conditions on the gift of giving which are:
– The cost of providing the benefit does not exceed £50 (including VAT)
– It isn’t cash or a cash voucher
– It isn’t alcohol
– It isn’t a reward for their work or performance
– It isn’t in the terms of their contract
So have a toast to the taxman as you’re tucking into your turkey!