Last updated on August 20th, 2024 at 12:13 pm
As I write this (at the start of October) the Christmas season is approaching and many businesses are starting to make plans for staff parties (possibly prompted by emails from venues offering Christmas works parties) or even bonuses and gifts. I thought I’d like to make you aware of the various tax rules surrounding this issue in the UK as they currently stand (2011 – checked and updated slightly in 2024).
Christmas parties
Parties can be a tax-efficient way of rewarding employees. This is because, according to the HMRC, employees and their partners do not pay tax and national insurance on any parties they attend if the cost to the business is less than £150 per head in the tax year (starting 6th April). The cost of the function includes VAT and the cost of transport and/or overnight accommodation if these are provided to enable employees to attend. Divide the total cost of each function by the total number of people (including non-employees) who attend in order to arrive at the cost per head. The event must be made available to all employees or (if you have more than one location) all those at a location. Continue reading