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5th December 2019

Yes, it is that time of the year again, Christmas is only a few weeks away, and you would have already thought about a party to celebrate the year. Granted; most of our clients are contractors, often only a couple of people on the payroll at the most, but that doesn’t mean that they have to miss out on claiming tax exemption on the annual Christmas party.

Can you claim it as a business expense?

The answer is yes, but as always, we are here to let you know what to look out for when putting them through your books. If you want the event to qualify as a tax-free benefit for your employees, then it must meet the following criteria:

  1. The party cannot cost more than £150 per person
  2. Shareholders are not included if they are not on the payroll or are directors as well
  3. The event must be an annual one
  4. The party must be for and attended by employees
  5. The £150 is also claimable for an employee’s spouse or family member attending

Things to note:

The £150 is an annual exemption, so if you are holding multiple annual events, the costs cannot exceed this amount in total per person.

Also, because this is an exception, if you go over and spend £200, you cannot put through the first £150 of it; in that case, the whole amount will be taxed as usual.

How to go about claiming the exemption in your account?

When submitting your expenses, makes sure that it is categorised as staff entertainment and describe it as “Annual Employee Event”, so that your accountant processes the exemption for you.

As always, If you have any questions about claiming annual event costs or anything accounting-related, please get in touch by emailing info@myaccountant.co.uk or calling 0800 917 9100

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