On The Spot Blogs
Let The Taxman Contribute To Your Christmas Party
It's hard to believe that it's only 6 weeks until Christmas.
If you'd like to show your staff how much you appreciate their hard work, but aren't sure what it might cost you and the tax implications, read on.....
You can spend a maximum of £150 per staff member plus another £150 for their other halves or guests. The only condition is that ALL members of staff at that location must be invited.
The cost is fully tax deductible with no benefit in kind income tax or national insurance to worry about. Your staff will feel appreciated and you save 19% corporation tax, so everyone gets that holiday feeling!
Ensure that the costs are called staff entertainment in your detailed Profit & Loss Account.
Remember it doesn't have to be AT Christmas; it could be a similar annual function such as a summer BBQ, as long as you spend less than £150 over the whole year.
The £150 includes VAT and the cost of transport and/or overnight accommodation. Divide the total cost of each function by the total number of people, including non-employees, to arrive at the cost per head.
The VAT is also fully recoverable when paying for your staff. If you make a small charge to your staff's guests and pay over a small amount of VAT, the VAT on the total cost for the guests is also fully recoverable.
I don't have any staff. Can I benefit from this favourable tax treatment?
As you are the only director/employee you might think you can't have a Christmas party - wrong!
You can avail yourself of the £150 per head exemption as a member of staff (the only one!) and also £150 for your better half even if he/she isn't a director or employee.
The cost is fully tax deductible so you save 19% corporation tax.
Again, ensure that it is called staff entertainment in your detailed Profit & Loss Account.
In this case we would advise that the VAT shouldn't be reclaimed.
Enjoy that Christmas Party a bit more knowing you've received a subsidy from 'The Taxman'.