It’s getting to that time of year again, (whether some of us like it or not!) where businesses are looking to plan their Christmas parties.
HMRC make one small concession to aid the ‘improvement of staff morale’. A business can spend up to £150, per head, on an ‘annual event’ such as a Christmas party, providing the following conditions are met:
- The event must be open to all staff
- VAT can only be reclaimed on the costs that relate to employees/directors of the company
- The £150 is an annual limit, so if you have more than one event per year, you need to keep a close eye on the total costs incurred in that year
- If the costs exceed £150, the WHOLE cost becomes a Benefit in Kind, for the employee
- you have to actually hold the event and keep the appropriate supporting evidence, as normal. Remember, this is not an allowance, so you can just withdraw £150!
It is also worth noting that a guest of an employees can be included in the head count too!
For further information, please visit https://www.gov.uk/expenses-benefits-social-functions-parties/what-to-report-and-pay