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.