Is a Christmas Party a taxable benefit for my employees?
Christmas parties are not classed as taxable benefits, given they meet the following criteria:
There is no monetary limit on the amount an employer can spend on annual events; however, if the expense per head is more than £150, then the total amount becomes a taxable benefit, and this can be accounted for in two possible ways:
If your business is VAT registered, you will generally be able to reclaim the input VAT attributable to the event so long as the primary function is to entertain or reward staff. There is a VAT block on entertaining expenses relating to customers and suppliers etc. therefore if the employees are there to act as hosts for non-employees, then the VAT won’t be reclaimable. Finally, it is only the VAT relating to staff that is reclaimable; therefore, unlike the rules for benefits in kind, VAT that relates to employees partners or families cannot be recovered.
If you have questions regarding the above, please contact me on 01803 296678 or firstname.lastname@example.org