How much can I claim for a Christmas Party?

Summer is over and my Team are starting to ask what we are doing for the Christmas Party this year.  We are not the only ones, so here is a reminder about the tax rules…

What is the HMRC limit for a Christmas Party?

When it comes to Christmas parties, for once, HMRC is not The Grinch…

Whether you are a small company organising a nice lunch or dinner, or whether you are pushing the boat out and planning a massive event, you can lay on a Christmas party for your staff and claim some, if not all, of it back from HMRC. If you choose to, you can include spouses and partners in your Christmas party plans and if you are feeling really generous you can buy Christmas presents for your staff (but not their spouses or partners).

If Christmas is not your thing, the same rules apply to any Annual Company Event – so you can have a summer barbecue, an Ede party, a Hannukah party etc.

Surely there is a catch, I hear you say…

Well there are some limits:

  • The maximum spend per person cannot exceed £150 – if it goes to £151 then the WHOLE amount becomes taxable on the individual as a Benefit in Kind and becomes disallowable for the company as Entertaining on their Company tax return.
  • The event must be available to the whole staff (or branch) team – no picking just the senior managers.
  • It is an annual allowance, so if you have both a summer BBQ and a Christmas party, the combined cost per person cannot exceed £150.
  • Gifts to staff cannot exceed £50.
  • If you are a sole director limited company, you can’t take yourself out for a party, but you can take your spouse or partner and both will be allowable up to £150 each.

Can a sole trader claim for a Christmas Party?

If you are a one-man/woman/person band then you can provide for your staff if you have them, but sadly you cannot claim your own attendance.

What if I go over the limit?

If the event fails to meet the above conditions and is therefore taxable, employers can enter into a PAYE Settlement Agreement (PSA) with HMRC to pay the tax on behalf of their employees.

You can read more on the HMRC website – Expenses and benefits: social functions and parties

For more advice on taxable benefits for your business – please get in touch.

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Published On: September 21, 2023

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