Did You Know Your Staff Christmas Party Is Tax Deductible?

I always suspected that HMRC wasn’t really the Scrooge people think they are. To prove me right, they allow any business to claim the cost of an employee party as a legitimate business expense, up to a limit of £150 per person.

We like to lead by example, so everyone at Black and White Accounting enjoyed a day of seasonal fun in the run-up to Christmas. We started with an office party at our Herriard HQ, with Secret Santa, sandwiches and cake and everyone wearing the obligatory Christmas jumper to raise money for our favourite charity. The day raised £80 for Save the Children.

And the fun just continued; we then channelled our inner child for a trip to the panto. We saw Peter Pan in Basingstoke before bumping into the entire cast in the pub afterwards, so we spent the rest of the evening having a giggle with them. It was all a great change from the usual (grown-up) dinner and drinks we’ve had in the past.

The day was also a chance to welcome Zonay to the Black and White team, which has now expended to seven permanent members and seven sub-contractors. I hope Zonay doesn’t expect this every week.

Employee party tax allowance – the conditions

We may not have seen Pinocchio at the panto but he’s not the only thing with strings attached. HMRC’s seasonal generosity for office parties also comes with a few conditions:

• The party must be an annual event, so you’re going to have to promise one next year too.
• The party must be for all employees, so you can’t use the allowance to reward your top performing team.
• The allowance is for any annual staff party, so you could have a Halloween do, or an Eid feast after Ramadan instead, or as well, so long as the cumulative total for the year comes in at less than £150 per attendee.
• The money isn’t an expenses claim. If you spend more than £150 per person on parties, you can’t claim any of it back. Simply divide the total cost by the number of attendees to find out whether you can claim.
• The majority of the people attending must be employees, but they can bring guests, who you can include when you’re claiming against tax.
• Costs includes everything to make the party go with a swing, including food, drink and entertainment. If you’re not into parties, it even covers trips out, perhaps go-karting, paintballing or a visit to the panto.

We’re looking forward to a Christmas break but we’ll be back in the office on Tuesday 2nd January 2018, when we’ll be gearing up for a busy month, especially with self-assessment tax returns due for our smaller businesses and sole traders tax returns.

To help our clients, we’ve streamlined our systems and procedures and introduced E-signers to ensure January is as painless as possible.

But until then, we wish all our clients, and our amazing staff, a merry Christmas and a happy new year!