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Don’t Get a Tax Hangover From Your Christmas Party!

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Here at Morgan Hemp we are keen to keep our clients abreast of news, issues and events to help you keep your finances in order and to make sure you are not losing out.

Heading in to the festive period you are probably making plans for a Christmas party. But have you thought about making sure the big annual celebration isn’t a gift to the taxman?

Entertaining your employees can be allowable for tax relief in your business accounts, and it is relatively simple to ensure your Christmas party isn’t a gift to the taxman by following these simple rules:

An annual event, such as a Christmas party, which is open to all staff and which costs less than £150 per head is a qualifying event as far as HMRC is concerned, and it will not be a taxable benefit for your staff.

The good news is that this applies to companies of all sizes – whether you are an SME or a large conglomerate.

And since the rules cover cost per head, you are free to pay for partners and spouses without the employee facing a benefit-in-kind charge, it’s the cost per head that is important.

However, there are conditions:

  • The £150 exemption includes all costs including VAT, accommodation & Transport
  • The £150 is an exemption and not an allowance, exceed the £150 and all of the amount becomes taxable, not just the excess above £150.
  • The event must be open to all employee’s

If any of these three conditions aren’t met then the cost of the meal or event becomes taxable in full on the employee.

For more detailed advice, contact one of our advisers at Morgan Hemp on: 01792 466428 or go to our website at: www.morganhemp.co.uk

And don’t forget, our Morgan Hemp Tax Tools App is on hand, available from the iTunes App Store and Android App Store, to help you to simplify your daily taxes.