08-04-2021
Annual party benefits

The cost of a staff party or other annual entertainment is generally allowed as a deduction for tax purposes. If you meet the various criteria outlined below then there is no requirement to report anything to HMRC or pay tax and National Insurance. There will also be no taxable benefit charged to employees.

  1. An annual function offered to staff generally is not taxable on those attending provided that the average cost per head of the function does not exceed £150.
  2. The event must be open to all employees. If a business has multiple locations, then a party open to all staff at one of the locations is allowable. You can also have separate parties for separate departments, but employees must be able to attend one of the events.
  3. There can be more than one annual event. If the total cost of these parties is under £150 per head, then there is no chargeable benefit. However, if the total cost per head goes over £150 then whichever functions best utilise the £150 are exempt and the others taxable.
  4. It is not necessary to keep a running total by employee but a cost per head per function. All costs including VAT must be considered. This includes the costs of transport to and from the event, food and drink and any accommodation provided.

Note, the £150 is an exemption and not an allowance. This means that any costs over £150 per head are taxable on the full cost per head.

It is highly recommended when planning a staff party or other annual event to aim to stay within the parameters outlined above to ensure there is no additional tax cost to the party.

Source: HM Revenue & Customs | 06-04-2021

Back

Post a Comment

Your email address will not be published. Required fields are marked *

*

  • ABOUT US

    the accountancy practice kent logo

    The Accountancy Practice is a Kent based firm specialising in small and medium sized businesses. We provide a friendly, professional service and regard our smallest client as important as our largest.
  • Latest News

    05-05-2021
    Debt respite scheme launched

    A new scheme, aptly ... read more

    29-04-2021
    Tax Diary May/June 2021

    1 May 2021 - Due ... read more

    29-04-2021
    End to COVID-19 adjusted right to work checks

    The government has ... read more

    More news

  • CONTACT US

    The Accountancy Practice
    10 Churchill Square
    Kings Hill
    West Malling
    Kent ME 19 4YU

    01732 897929

    Fax: 01732 897939
    info@theaccountancypracticeltd.co.uk


    Facebook
    Twitter
    Linkedin
  • Why choose us

    By working more closely with you than traditional accountants, The Accountancy Practice is able to gain a deeper understanding of your individual business needs. We are then on hand to support you with day to day issues and provide ongoing financial and taxation expertise. You can think of us as your virtual Financial Director.