Don’t forget to use up your tax allowance for Christmas parties

May 9, 2010

Don’t forget to use up your tax allowance for Christmas parties!

It’s amazing how many companies do not realise that they can claim the cost of their staff Christmas party against their tax bill for the year.

Each company has a maximum annual tax benefit for corporate entertainment of £150 per member of staff. Although companies sometimes feel they should be cancelling Christmas parties because of a lack of budget, many do not realise that throwing a party could benefit their staff motivation and boost productivity – and all this can also reduce their corporation tax bill!

With some careful planning any firm will find that they can book a fantastic Christmas party for their staff without exceeding the £150 tax allowance threshold – and that's including food, drinks and extras.

Christmas parties are always welcomed by staff who work hard the year round and look forward to one night where they can let their hair down – and not having to pay for it themselves is a fantastic bonus. So don’t miss the opportunity to treat the staff AND save on tax.

If you have already thrown an event this year for staff, you can still claim the tax-free benefit providing the total costs of the events has not exceeded the £150 per head limit.

It is, however, important to remember that as soon as you go over the £150 per head limit, the entire amount becomes taxable so keep an eye on those figures. The £150 per head rule is worked out as the cost of the function, including VAT, transport and accommodation, divided by the number of people attending.