In the lead up to Christmas, bosses are being urged to continue with their annual Christmas parties this year, despite the current economic climate, with research suggesting that more than half of small businesses are expected to cancel their annual event for staff.
This is following the announcement by Phil Orford, chief executive of the Forum for Private Business stated that the “benefits of an annual get-together cannot be underestimated…the important thing for employers to remember is that being seen to do something for staff at Christmas, however small the gesture, is far better than nothing at all”.
Matthew Fryer, Tax Manager at Brookson suggests that those who run their own limited company may be interested to hear that “a staff Christmas party or other annual functions qualify as a tax free benefit and is tax deductible for the company as long as the cost to the company does not exceed £150 per head. HMRC stipulate that the event must be open to employees and directors and must be primarily for entertaining staff, however, guests can attend. This therefore means that you as the director (and probably only staff member) of your own limited company could invite both yourself and for example your spouse or partner as a guest to the Christmas party.
“The cost of the whole event is an allowance expense for your business and providing the individual cost per person does not exceed £150 (this includes VAT, transport and accommodation), then there is no Benefit in Kind on the individuals attending.”