Write your Christmas party expenses off against tax

29/12/2008

Even the taxman has a heart at Christmas time and will allow you to write off a maximum of £150 per head against tax. Nor will employees have to pay NICs on the benefit.

There are a few provisos, though.

This tax-free exemption is for the benefit of employees and their partners, not for clients or anyone else.

Secondly, it is important to add all the costs of the function together, including transport an accommodation, and carefully divide the total by the number of people.

Thirdly, the exemption disappears if it goes one penny over the £150 per head limit. If the cost rises to £175 per head for example, the employee would be liable for tax on a £350 benefit.

Lastly, the £150 per head limit is for the entire year’s spend on business functions so any extra costs incurred earlier in the year need to be taken into account when doing your sums.

Although the rules on Christmas parties may seem tight, at least you can reassure your employees that cutting back on extravagancies may actually save them money!