An employer can spend up to £150 a year per person on entertaining employees (including directors and company secretaries).
This can be spent on one single event (for example, the Christmas party) or in several chunks over the course of the year.
This would save tax of £60 for a higher rate taxpayer, plus National Insurance savings of up to £20.70 for the company and £18 for the employee – a total saving of £81.70 per person.
- If you exceed the £150, the whole amount becomes taxable, so make sure you keep it below £150.
- VAT is claimable on the employee entertaining (for VAT registered businesses only, of course). But the £150 limit is the total including VAT.
- If you have a ‘husband and wife’ company with both partners on the books as employees/directors or company secretaries, you can still claim the £150 for each of you.
- You can even claim it for the kids if they are genuine employees!
- The £150 limit applies to your company financial year, not the tax year to 5th April.