By Rebecca Crawford
Yes, it’s December; there’s no getting away from the fact that the festive season is officially upon us. How quickly the year goes! One minute you’re enjoying the spring air, you blink and all of a sudden Christmas is around the corner!
We all like to celebrate, especially at this time of year; we’ve worked hard all year and we deserve to let our hair down. At Danbro, our Christmas ‘do’ has been planned for months; a night of fun and laughter with all my fantastic colleagues – I’m really looking forward to it!
Not only is the Christmas Party good for your employees, it’s a good thing for the company too, as they can benefit from some tax relief. That’s right, tax relief on a party! The best thing is, it’s not just for big employers; it’s for all companies, including independent professionals!
Of course with everything there are conditions the ‘Tax Man’ needs you to adhere to, so here’s the lowdown:
Keep the cost to £150 per head (including VAT)
If there’s travel, drinks, a meal and a show that’s fine, it can all be included as the cost of the event. With just two of you, that’s £300 to spend; with four people, a whopping £600!
It must be an annual event
The event must occur every year; it can’t just be a one off. Christmas is a favourite pick for annual events, because it’s typical to have a party at Christmas. Although, if you’re a bit of a Scrooge, prefer a summer event, or would rather have a birthday bash, that’s ok; you can do it at any time of year! You just have to remember it needs to happen every year.
All employees must be invited
Whether they actually go is beside the point, but in order to benefit everyone must have the opportunity to attend. You can invite partners along too. If you employ your partner in your company, you can both invite another guest should you wish to do so, taking your party number up to four.
If you’ve got more than one branch or location it’s going to be difficult for everyone to participate in one big event. In this case you can have separate events for the different locations; they’ll all be exempt costs (providing the other conditions are complied with).
You can split it up
You can have your Christmas party and another event within the year, as long as the total cost per head of the events combined is under £150.
Just a note…it’s an exemption for tax, not an allowance
A bit more of a technical point; you can spend up to £150 per head, but no more. You can’t just claim £150 per person if you haven’t spent £150; you have to claim for what you actually paid.
And here’s the kicker: don’t get carried away with your spending, because if you spend even £1 more then that’s it, the entire event cost will either be treated as a benefit in kind or disallowable against your corporation tax. We don’t want that to dampen your evening, so just keep an eye on the cost!
It might not seem like much or you may not think it’s worth it but with every £300 annual event it reduces your corporation tax by £60 every year. Getting a £60 saving and a knees up? Sounds good to me!
Merry Christmas Everyone!
Want to know more? Call your personal accountancy team on 01253 600140