Christmas With The Tax Man

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It is that time of year again, when employers may be planning their festive parties to reward employees for a year of hard work! But beware your generosity doesn’t fall foul of the tax man and his purse strings.

Christmas parties qualify as tax free provided certain conditions are met. The party must be open to all employees, and the total cost cannot exceed £150 per head per year. If the cost per head exceeds £150, the entire event becomes taxable.

How would this differ if an employer were to have two annual parties? For instance a Christmas party at £100 per head and a summer ball for £80 per head. Either party would be covered by the exemption separately; however when combined they eclipse the £150 limit. In this case the logical conclusion is that the Christmas party would be exempt, while the entire £80 per head summer ball would be taxable.

Good points to bear in mind while you plan your festivities this Christmas time.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Image courtesy of Ambro at FreeDigitalPhotos.net

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