Kirkpatrick & Hopes - Succession Planning Accountants

Call us on: 0118 923 5800
Email us: mail@kirkpatrickandhopes.com

Christmas party? Pay a benefit of up to £150 per employee, tax free

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.

Note that:

  • 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.

3 Responses to “Christmas party? Pay a benefit of up to £150 per employee, tax free”

  1. Kate Burton says:

    Hi Andy, does the Xmas party allowance also apply to sole traders or just to companies? Thanks, Kate

    • Bernadette Brownlie says:

      Hi Kate
      Thanks for your good question. For business owners then the allowance only applies to limited companies but the relief applies to all employees.

      Thanks and regards
      Andrew Scott

  2. Mark says:

    Husband and wife ltd company… Organising Christmas do !
    Both directors / paid employees……
    Ordinarily I believe an employees is allowed to take a partner (guest??) they are allowed an additional £150 for a Christmas party

    As I am husband and wife team does that mean we can take a guest each or is that extra tax break solely for partners.

    Kind Regards and merry Christmas

    Mark

Leave a Reply