Staff parties: at a glance A staff party or an annual function qualifies as a tax-free benefit for your employees providing that you meet the following conditions: The total cost must not exceed £150 per head, per year. £150 includes VAT together with any extra costs such as transport and accommodation.
Is staff entertaining a taxable benefit?
Staff entertaining is generally considered to be an allowable business expense and is therefore tax deductible. Allowable costs in this context include food, drink, entertainment, venue hire, transport and overnight accommodation.
Are employee parties deductible?
Although employee holiday parties are fully deductible if they serve a clear business need—and most can meet that requirement based on their importance for employee engagement—the issue becomes trickier when there will be guests attending who aren’t employees and their spouses or significant others.
What staff entertainment is allowable for tax?
Staff entertainment is an allowable expense for corporation tax purposes provided that it is wholly and exclusively for the purposes of the trade. Common examples of this are meals, parties or other entertainment undertaken to boost staff morale.
What is the limit for staff entertaining?
There is no limit on the number of guests each employee can bring for this exemption to apply. However, most employers limit the number of guests for cost purposes. When calculating the cost per person, it is the total cost divided by the total number of attendees, not just the total number of members of staff.
Can you claim tax back on entertainment?
The short answer is that the cost of business entertaining isn’t tax deductible, and you can’t recover VAT on expenditure. However, as is often the case, the rules are complicated and there are some circumstances in which you can reclaim VAT.
Is staff Christmas party allowable for tax?
Is a Christmas party for employees an allowable expense for business tax purposes? The general rule is that the cost of staff entertaining is tax deductable, as long as it is not incidental to the entertaining of others.
