Don’t forget about the Christmas party tax break!

Wow, is it that time of year already? As the holiday season fast approaches, businesses up and down the country will be spreading the joy by treating their employees to a night full of festivities.

And what’s better than a fun-filled evening with your hard-working team? Tax breaks, of course!

Employers are able to spend up to £150 per employee each year on entertainment, completely tax-free. This includes everything from Christmas parties to work socials.

But be careful not to get too carried away. We’ll explain the nitty-gritty details below.

How can the £150 be spent?

Employers are able to provide an event (or several throughout the year) for the entire team completely tax-free, providing the cost per head does not exceed £150.

This can include the costs of accommodation, transport and food and drink. To calculate the cost per head, simply 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.

Can I spend more than £150?

For your event to be deemed tax-deductible, the cost per head for the event (or events combined) must be less than £150. A penny over and the whole benefit is taxable.

Does the tax-break include gifts?

No. When it comes to gifts for staff, only those deemed ‘trivial’ are exempt from tax. All other gifts will be classified as benefits, on which tax must be paid. Generally, if a gift costs less than £50 (and the benefit is not cash or a cash voucher), it can be considered trivial for tax purposes.

For more information on the Christmas party tax break, please get in touch!

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