Christmas party with a gift of tax breaks

Google reviews
December 20, 2023
n

Yes, it’s that time of year again! Christmas is on the horizon, and the office Christmas party planning will be in full swing for many companies across the UK. So, if you are planning a shindig for your employees, you should maximise the tax breaks available from HMRC, and make sure you don’t fall foul of the rules and fail to pay what could be due to the taxman.

If you want to have a party that can benefit from tax breaks, then there are a few rules you need to follow. The party needs to cost less than £150 per head – providing you haven’t had any other parties during the same tax year. The exemption of £150 per person applies across the year, so if you have had a summer barbeque for example, which cost £60 a head, then you only have £90 per person left to spend on the Christmas party.

The party must be open to all

The parties must be annual – like the Christmas party – and must be open to all employees, otherwise they will not be considered exempt by HMRC.

If you happen to have various offices around the UK, then it is fine to have different parties in different places, as long as all members of staff are able to attend one of them. If this is the case, then you will still benefit from the tax exemption.

One other thing to consider is that if you have staff who are on Salary Sacrifice arrangements within your business, then you need to inform them of how much each social occasion is worth to comply with the rules.

Remember, if any of the events you have put on for staff throughout the year don’t count as being exempt, then you must report all costs to HMRC and you will be liable for National Insurance payments on those amounts.

Each employee will need to have the cost reported to them on their P11D form, and the employer will need to pay Class 1A NICs on the amounts. 

You can find out more about your obligations on the Gov.uk website, which is the best way to ensure you don’t end up with a financial hangover.

Let us help you

If you want to know what you can and can’t do in terms of the cost of your Christmas party, then please get in touch and we will be happy to offer you the help and guidance you need.

Office party

Resources

Recent Articles

HMRC app helps with student finance applications

HMRC app helps with student finance applications

An app from HMRC which provides information such as your National Insurance number and tax information has been flagged by the taxman to help students completing their A’ Levels this year and planning to head to university in September. Anyone who is applying for...

Want to avoid fines from HMRC? Here’s how

Want to avoid fines from HMRC? Here’s how

No-one likes to pay more to the taxman than they have to, but if you fall foul of HMRC’s rules, you could find yourself paying a penalty, and interest if things are not sorted out quickly. There are various fines you could face from HMRC if you get things wrong, and...

Why Stamp Duty Land Tax might need to be reformed

Why Stamp Duty Land Tax might need to be reformed

Stamp Duty Land Tax (SDLT) is the bane of property buyers in the UK. It is paid on every property purchase worth more than £250,000, and more people are being forced to pay it each year as the thresholds stay the same while property prices rise. The number of...

Ready to join us?

Whether you’re a contractor, freelancer, or small business, Bright Ideas can help remove the burden of time-consuming and complex finances. We’ll draw on our years of knowledge and experience earned helping sole traders just like you.

When you choose us, you’ll be assigned a dedicated Account Manager who’ll provide one-on-one support that’s customised to your business. Communication is key, so we’ll always answer your questions or requests as soon as we can. In fact, we offer a same-day response guarantee for emails and calls received before 3pm.

Contact us to get started

Give us a call us or send an email today!

Looking to switch accountants?
We make the transition simple.

Does your current accountant give 1-to-1 support? Are they fast and thorough?
Slap-dash services hold businesses back, so try our experts instead.

Move to an accountancy service that goes the extra mile…

Start the conversation

Let’s make your finances Brighter

Call us Monday to Friday 9am - 5pm

0161 669 4221

Request a call back