Kirkpatrick & Hopes - Succession Planning Accountants

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

Christmas comes but once a year! Tax Savings for Christmas parties

It will soon be time to attend the annual staff party.

Mr Tax Man definitely enters into the seasonal spirit by setting the annual tax free allowance at £150 a head.

In other words generous employers can provide an annual function costing £150 per employee (or less) and it is a tax free benefit for the employee.

The employer can claim the cost as a tax deduction in the annual accounts. .

You can provide more than one function providing the overall cost does not exceed £150 a head. The function does not have to be at Christmas it can be at any time of the year.

A word of warning – if you get your sums wrong and the cost exceeds £150, then the full amount is taxable as a benefit in kind on the employee.

A cost of £152 a head would give a 40% taxpayer a £60 tax bill. If this happens the employee can reimburse the employer with the cost over the £150 and avoid the benefit.

Yes, that is all very well I hear you cry for large businesses with substantial staff entertainment budgets but I am a two person band, the other member of the team is my spouse. How can I make the rules work for me?

As a suggestion why not make your wedding anniversary your annual function instead of Christmas? This way Mr Taxman pays towards the anniversary of your special day?

I would make sure the restaurant booking is in the name of your company and that you pay with a company cheque, debit or credit card. Like all tax planning it is important to make sure the paperwork is in order.

 

Leave a Reply