christmas party

Company Christmas Party – what’s the deal with tax?

Victoria Scally News

It’s widely known that the annual Christmas Party is tax deductible.

What isn’t always clear is that it doesn’t need to be at Christmas and it doesn’t need to be just a single event. 

Subject to a few conditions, you get £150 (including VAT) ‘per head’ to spend on the Christmas Party per tax year on each employee without incurring any personal tax problems. This includes Directors if you are a Limited Company. 

This is tax deductible and generally you can claim the VAT back.

(TRAP: There are a few instances where the VAT can be restricted in part or full, for example if you are entertaining customers at the same time).

You can also split this £150 across the year, so for example you could have 3 parties/functions at £50 a head.

Some other pointers on this:

  • It is an all or nothing limit – if you spent £151 it is all taxable, not just the £1
  • The event must be open to all staff (in that location if you have branches)
  • The £150 include extra costs such as transport and accommodation

If you have any specific questions about this, please don’t hesitate to get in touch with the team.