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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 amazing colleagues whom you have worked with throughout the year. Sometimes it could lead to huge costs for a business owner (limited companies only) for staff who have contributed immensely to the growth of the business.

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

  • Your Christmas party must be open to all employees
  • It could be an annual occurrence and not necessarily a Christmas Party
  • It must not 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 staff if the cost is a penny over the £150 threshold;
  • All receipts for the amount spent towards the party must be kept;
  • 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