Christmas Party Costs

Yes, this will be an allowable cost for your business as it is to reward and motivate your staff.

However, there are some rules regarding staff entertaining that you should be aware of, otherwise it could lead to tax consequences for your staff members. 

If you spend more than £150 per head, then the full amount will be taxable on the staff member; not just the amount in excess of the £150 limit. This tax charge is known as a benefit in kind. If you spend less than £150, no benefit in kind arises.

However, HMRC state that this £150 limit is to cover “annual events”, so if you provide more than one annual event, say a summer social too, then you need to make sure the cost of both events combined, total less than £150 per head. They also state that the events must be open to all staff to attend to qualify.

Please note, there are different rules if other people attend your party, such as customers and suppliers.

Due to the ongoing situation with Covid-19, HMRC has confirmed that the treatment of virtual parties can qualify for the same tax relief as actual in person parties. This is not just a temporary measure for Covid-19, as it will now be in place going forwards as well.

So as long as you stick to the costs being less than £150, then Happy Holidays to you all!

Treating your staff can be a very complex area, so call 01224 637100 or enquire online here to arrange an appointment with your TaxAssist Accountant and give yourselves peace of mind this festive period.

Date published 26 Nov 2019 | Last updated 16 Dec 2021

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.