Christmas Party Costs

My staff will be attending a Christmas party that I have organised for them. Will the cost be an allowable deduction for my business?

3rd December 2019

Yes, this will be an allowable cost for your business as it is to reward and motivate your staff.

However, there are some rules regarding staff entertaining that you should be aware of, otherwise it could lead to tax consequences for your staff members. 

If you spend more than £150 per head, then the full amount will be taxable on the staff member; not just the amount in excess of the £150 limit. This tax charge is known as a benefit in kind. If you spend less than £150, no benefit in kind arises.

However, HMRC state that this £150 limit is to cover “annual events”, so if you provide more than one annual event, say a summer social too, then you need to make sure the cost of both events combined, total less than £150 per head. They also state that the events must be open to all staff to attend to qualify.

Please note, there are different rules if other people attend your party, such as customers and suppliers.

So as long as you stick to the costs being less than £150, then Happy Holidays to you all!

Treating your staff can be a very complex area, so call 0800 0523 555 or enquire online here to arrange an appointment with your TaxAssist Accountant and give yourselves peace of mind this festive period.

By Samantha Skyring FCCA

Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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