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.