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Save tax and party


Around this time of year some businesses start to think about their Christmas party. When it comes to entertaining your employees, all of the costs are usually allowed against business profits. On top of this VAT on the party costs relating to the employees can also be reclaimed by the business.

What about the £150 limit that you have heard about? Well this actually relates to the employees themselves. Should the total cost of all the functions in a tax year exceed £150 per head, then the employees will be taxed upon the full cost as a benefit in kind. The company would be liable to National Insurance on this amount. HM Revenue & Customs generously define employees as including; current employees, retired employees, and partners of existing and past employees.

Should your parties start becoming costly, one option may be to charge nominal fees for some functions to keep the total cost to the business below £150 per head per year.