Can you claim your holiday party as a business expense?

As the festive season approaches, many Limited Company directors are gearing up for their annual company party. The good news is that HMRC is quite accommodating of these kinds of events, as they consider staff entertainment to be a legitimate business expense. There are, however, a few rules you need to follow for you to be able to claim your event.

Understanding the Rules

You must ensure your event meets the following criteria for it to be considered a legitimate business expense for Tax and National Insurance exemption:

1. The total cost of the event is under £150 per person, per year, including additional expenses such as accommodation or travel
2. The event is open to all employees
3. The event occurs annually
4. The value of the event is reported to any employees on a salary sacrifice scheme

Keep in mind that the same rules apply whether your event is in-person or virtual.

Is there a limit on the number of employees that can attend?

Whether you’re on your own or have many employees working for you, so long as you follow the above conditions, you can still claim for your event. There is no limit to the number of employees that can attend and invitations can even be offered to family members of staff. Just remember that they need to follow the £150 limit too.

Remember, this is an exemption, not an allowance!

It’s vital to keep in mind that exceeding the £150 per person limit, even by a small amount, will render the event no longer exempt from Tax and National Insurance. To prevent this, you can calculate the cost of your event in advance:

1. Total up all the associated expenses.
2. Divide this total by the number of employees in your company.

If you host multiple events throughout the year, you must not forget that the £150 limit applies to the entire year, not per event. For more comprehensive information on staff events, you can refer to the gov.uk website.

How SG Accounting can assist you

While you’re enjoying your party, we can help you stay compliant. As expert accountants, we can guide you through the complicated rules and regulations and maximise your take home pay. To see how we could support you, get in touch with a member of our team today.