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Make your Staff Christmas Party expense allowable!!!

Can’t believe another Christmas is around the corner, a time to have fun with the amazing colleagues whom you have worked with over the year. But might be a huge cost for a business owner (limited companies only) for staffs who have contributed immensely to the growth of the company.

Whether such cost is allowable for tax purposes and does not trigger Benefit-In-Kind (BIK) for the hardworking staffs solely depends on the application of the rules on such staff cost. The following 3 rules are pertinent:

  • Your Christmas party needs to be open to all employees
  • It is an annual occurrence but doesn’t have to be at Christmas
  • It doesn’t cost more than £150 per employee.

As simple as it is, many limited companies are still caught up with it and there are some points to note:

  • The whole cost will be disallowed and recognized as BIK to your staffs if the cost is a penny over the £150 threshold.
  • All receipts for the amount spent towards the party must be kept J
  • The party must be for all employees and not just directors – except where the director is the only employee.
  • The amount spent on friends or family is excluded.
  • And finally, the £150 threshold will be reduced proportionately if an earlier event had already taken place.

Sounds good, right? If you have any question or any other business and tax advice, please do not hesitate to contact us at Bergen Associates  

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