It’s fast approaching that time to plan and book the office Christmas party! Exciting as it is there are a few things to consider.
The good news is there is an annual tax exemption for employee entertaining. Terms and conditions apply however. This is set at £150 per head. This figure is inclusive of VAT. This can include guests; covering spouses and partners and even customers if they are invited to what is predominantly a staff event.
The £150 limit per person covers the full tax year including food, drink, entertainment, staff events etc. This is not just for your Christmas party, this is for all entertaining you may have across they year.
Watch out though, as if this allowance is exceeded; tax will need to be paid on the full amount. If £151 were to be spent during the year on one employee, this total amount then becomes taxable not just the £1.
If the limit is exceeded the benefit must be reported on each employee’s P11D, or alternatively, the grossed up tax can be paid by the employer through a PAYE settlement agreement.