Christmas Party Tax Relief

 It's only 6 weeks to go until Christmas and thoughts can start to turn to the office Christmas party. We are often asked whether tax relief can be obtained from such an event. The good news is that in many cases it can. There is an exemption from tax, national insurance and reporting if you provide a party or similar function for employees that meets the following three conditions:

1. It’s an annual event, such as a Christmas party or summer barbeque
2. The event is open to all of your employees
3. The cost per head of the event isn’t more than £150

Open to all employees can be used to cover the situation where different departments organise their functions individually or where staff are split across different sites.

Please note that the £150 per head is not an allowance. If the cost exceeds this figure then it must be reported on a P11D and may be liable to tax. If you have more than one annual event e.g. a summer barbeque and Christmas party, then as long as the combined cost per head remains below £150 neither is reportable.

You can invite partners of your employees to the event and they are treated in the same way, however, different rules will apply if associates, suppliers or customers are present.

Unfortunately, if you are a sole trader and don't employ anyone, this opportunity can't be used - it is specifically designed for employees.

If you need further guidance please call us on 01865 821100.