The taxman wants you to party
Is your Christmas party tax deductible? Tis the season to be jolly for Limited company owners, according to the taxman! Were you aware there is a little-known exemption from tax for annual staff parties?
Typically associated with the Christmas season, the exemption can in fact apply to one or more events during the year.
The maximum cost per individual attending the party is £150 (including VAT and all incidental costs). To qualify for tax exemption, the event must be open to ALL staff, or to all of those working at a particular location.
Where there are several “events”, the employer can designate which ones should be taken into account to make the best use of the available exemption.
If, for example, the cost per head of event A is £100, event B is £70 and event C is £75, the employer can nominate events B and C as covered by the exemption, assuming all conditions are met. This allows for the best overall tax results.
How to claim back Christmas Party expenses
Knowing and understanding the different tax exemptions available to your business (including your annual staff events) can save your business thousands. The rules for businesses are complex, but HMRC have several reliefs and exemptions available that will help reduce your overall tax liability and assist with the general operation of your business.
If your accountant is not providing these solutions, it’s probably time to switch accountants!
Contact us now for a FREE consultation and speak to an accountant about your business expenses and ensure your business expenses are managed properly.