The yuletide season will shortly be descending upon us and you may well be starting to think about organising a party to entertain your staff at Christmas time. Read on to discover how you can limit that tax bill….
In the normal course of events when an employer provides entertainment for their staff the employees would be charged on their share of the event. There are however exceptions to this rule.
As an employer if you provide your staff with an annual party then there is no charge to tax on the employee and the cost is fully allowable for corporation tax purposes providing the cost per head does not exceed £150. In addition, ALL members of staff at that location must be invited. Other halves or guests can be included.
You could provide two events with the cost per head of £75 for each event but if you provided two events and the latter one took the total cost per head to above £150 then only the first one would be allowable.
To work out the Cost per head, divide the total cost of the function by the total number of people (including guests).
Any VAT paid can also be reclaimed provided that the conditions outlined above are adhered to.
The rules on what is allowable for tax purposes when entertaining can be complex so if you need any help in interpretation do give me a call 07596 516670, firstname.lastname@example.org
The Winchester Bookkeeping Company