It’s Party Time….
Everyone loves a Christmas Party but I am sure your employees would prefer it to be tax free, so lets have a quick recap on the rules. HMRC have an Exemption (not an allowance) of £150.
- Available to employees generally or;
- Available to employees generally at one location, where the employer has more than one location.
- If the employer provides two or more annual parties or functions, no charge arises in respect of the party, or parties, for which cost(s) per head do not exceed £150 in aggregate.
The figure of £150 is not an allowance. For functions that are outside the scope of the exemption directors and employees, except those in an excluded employment, are chargeable on the full cost per head, not just the excess over £150, in respect of:
- Themselves and;
- Any members of their family and household who attend as guests.
The cost of the function includes VAT and the cost of transport and/or overnight accommodation if these are provided to enable employees to attend. Divide the total cost of each function by the total number of people (including non-employees) who attend in order to arrive at the cost per head.
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