Kirkpatrick & Hopes - Succession Planning Accountants

Call us on: 0118 923 5800
Email us:

Christmas comes but once a year!

And when it comes it can be a ruddy nuisance! It always seems to coincide with the shops being at their busiest. But never mind, The Great Escape might be on the TV – it usually is. Yes, it is nearly that time again to attend the annual staff party.

Mr Taxman 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 lay on more than one function, provided that 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 for large businesses with substantial staff entertainment budgets (I hear you cry). I am a business consultant with only two employees, one being me and the other being my spouse; I don’t have money to spend on frivolity. How can I make the rules work for me?

I appreciate that we should all tighten our belts in these difficult times.

I am not suggesting you increase your spending, but many couples do go for a meal to celebrate their wedding anniversary. Why not make this your annual function and have Mr Taxman pay towards the celebration 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