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Xmas Time

Well it’s coming around to that time soon…yes Christmas Party time. If you are planning a Christmas Party, make sure its tax deductible by following a few simple rules.

Your party must be:

  • Open to all employees
  • An annual event
  • Cost less than £150 per head

If you meet the above criteria then there is no benefit in kind on the Christmas Party and it is allowable for tax.

However beware…

  • The £150 includes VAT
  • If the cost is £151 then all of it is taxed as a benefit in kind!
  • This is not a licence to put a flat rate of £150 through your accounts
  • You can have more than one event but the £150 is reduced proportionately
  • Like all business costs you must have a receipt
  • The event must be for all employees and not just directors – except where the director is the only employee

The £150 limit is for each employee so no family or friends allowed sorry! However if you are a Director and therefore an employee of your own company then you can have a Christmas meal courtesy of the company.

Check out HMRC’s website for more detailed information on social functions and Christmas parties at http://www.hmrc.gov.uk/paye/exb/a-z/s/social-functions.htm