After a ‘lost’ year of Christmas parties, there are sure to be some big plans for this year. The question we are most often asked is “are Christmas parties tax deductible?”?
The simple answer is yes, but the event must meet certain conditions.
- The party must be for your employees, and not entertaining clients. However, employees are allowed to bring a partner.
- Everybody must be invited – it can’t be just for senior staff for instance.
- The total cost must not exceed ￡150 per head (this includes food, drink, accommodation, transport)
- This is an annual cost. If you have already held a summer party at ￡75 a head, you only have ￡75 a head left for the Christmas party.
- The?￡150 spend is an exemption?criterion not an allowance. You must spend the money in order to make a claim.
- Christmas gifts for employees are taxable. Gifts of money,?such as the annual bonuses, must be put through the payroll system and taxed in the usual way. Any other gifts must be included on?the P11D form, although it may be possible to apply the trivial benefits exemption.
- Christmas?gifts to charities are also tax deductible.?
So dust off the tinsel, dig out the Christmas decorations and enjoy a well-earned festive celebration!
