With the Christmas Parties just around the corner, we thought it is a good time to clarify the rules on tax free staff entertaining.
What is counted as tax free staff entertaining and things to be aware of?
Your Staff Christmas Party is a Deductible Expense
The good news is that your staff Christmas party is an allowable expense for the purposes of reducing your corporation tax bill. This is because entertainment for the benefit of employees.
Benefit in Kind
There is an exemption of £150 per person, per annum for staff entertaining. This means that provided your Christmas party and any other staff function cost less than this, your employees will not have to pay tax and you will not have to pay Employer National Insurance Contributions on the cost. There are rules that apply to multiple events of which you should seek the necessary advice.
Treatment of VAT
Did you know that you can claim input VAT on staff entertaining? If all the attendees are staff, all the input VAT can be recovered. If guests or partners are invited the input VAT must be apportioned based on the number of people. For example, if each member of staff is allowed to bring one guest, 50% of the VAT can be recovered. This is not just for the Christmas party and can apply to events throughout the year.
If you are looking for professional advice on any of the issues raised above, then give us a call on 01424 425113. We provide tailored service that is unique to you. First of all you can come in for a FREE consultant where one of our members of staff will speak with you about how exactly we can help you.
We are an award winning family run firm, specialising in small business and service charge accounts. We are based in Hastings, East Sussex offering affordable fixed fees to all.