Is Your Christmas Party Tax Deductible?
Christmas is just days away and one of the traditions of the season is the company Christmas Party. Whether you choose lunch, dinner or a visit to Winter Wonderland, you might be wondering if you can claim back any of those expenses against your Corporation Tax bill.
Well, we have good news for you! HMRC allows a maximum amount of £150 per head (including VAT) to be spent as staff entertainment throughout the year. This means that the total amount can be spent on several occasions as long as it does not exceed the threshold, and it can include food, drinks, accommodation and transport.
If the expenditure of the party goes above the threshold, even by a penny, the total cost of the event is taxable and it’s considered as a “Benefit in kind”. It must then be reported on a P11D and directors and employees must pay tax on the amount of the benefit.
Furthermore, the cost per head must be calculated as the total cost of the party divided by the total number of the people attending, including guests.
So spend wisely and drink responsibly!
If you would like further advice on this matter then please do get in touch via firstname.lastname@example.org or calling us on 020 7488 3614.