In the spirit of seasonal cheer, it’s that time of year again to remind you all that HMRC has a festive loophole that means businesses pay no tax on corporate Christmas parties.
Businesses of all sizes are allowed to spend a tax-free amount of up to £150 (inc. VAT) per member of staff each year. The limit includes a whole host of items such as accommodation and transport, not only food and drink. What’s more, as long as the cost per head stays under the limit, employees can bring their significant others along.
After a busy year of work, what better way to reward your employees than with a chance to let their hair down? A Christmas party can be an excellent way of boosting staff morale as days get colder and shorter, and can make your employees feel valued for their hard work, as well as encouraging productivity.
This tax-free limit applies for a whole tax year, so an employer can actually put on both a summer and winter party, as long as the total cost is less than £150 per head.
A word of caution, however, as if you spend as much as one penny over this limit, you will be liable for income tax and National insurance on the whole amount.
This is a rare gift from the taxman, so make sure you take advantage and deck the halls for your tax-free office Christmas party!
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.
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