Tuesday, 18 September 2012

Are Christmas Parties Tax-Deductible ?

It's coming up to that time again when companies are considering a good night out with colleagues. So, are Christmas parties tax-deductible ? Here are a few guidelines:

For the cost to be tax-deductible it must be:
  •           Open to all employees
  •           An annual event
  •           Cost less than £150 per head

If your event meets the above criteria then there is no benefit in kind on the Christmas Party/meal and it is allowable for tax.
However beware...
  • The £150.00 includes VAT
  • If the cost is £151.00 then all of it is taxed as a benefit in kind
  • This is not a licence to put a flat rate of £150.00 through your accounts
  • You can have more than one event but the £150.00 is reduced proportionately
  • Like all business costs you must have a receipt
  • The event must be for all employees and not just directors - except where the director is the only employee
The £150.00 limit is for each employee so no family or friends allowed. However if you are a Director and therefore an employee of your own company then you can have a Christmas meal courtesy of the company.

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