19 Dec How to make your Christmas party a tax-allowable expense: 6 top tips
The Christmas season is here again and there’s no better time to treat your staff and customers.
You may, however, be concerned about the costs involved in throwing a Christmas party. However, if you follow HMRC’s rules and regulations, you may get be eligible for a number of tax exemptions. Here are six tips to follow:
1. Make it a regular event
This tax deduction does not apply to one-off parties, so make sure it’s an event you hold every year.
2. Open it up to all staff
It should be a company-wide event, open to all employees. You cannot claim the tax exemption if any staff in your payroll are excluded.
3. Consider multiple locations
Workers working in different locations may not all be able to assemble in one place for a party. However, you are allowed to hold parties in multiple locations in order to allow each employee to attend. While you can invite customers or staff for the event, it should mainly be for the staff.
4. Stick to £150 per person
This figure is worked out by dividing the total party costs by the number of attendees, including non-staff. The booking information can be used if it is not possible to count the exact number of people. Remember that you may not get the tax exemption if you exceed the figure. Spending £200 and claiming an exemption for the first £150 is also a bad idea.
5. Split across several annual events
You can still get the £150 tax exemption even if you hold more than one annual event. £70 could be spent on the Halloween party and £80 on the Christmas event, for example.
6. Spend it however you like
How you spend the £150 per person is entirely up to you. It can include food, drinks, accommodation, travel, or entertainment. You can also take your staff paintballing or organise a personalised award ceremony and get prizes worth the £150. If you run the company alone, consider getting a friend and throwing a little party worth £300.
Tax exemptions are critical in keeping your business overheads manageable. SQK Accountancy specialises in cloud accountancy and VAT. If you need further help, why not get in touch and we will break down our accounting packages for your small business.