Christmas parties – avoid the taxman joining in
A Christmas party (or other annual event for employees) does not give rise to a benefit in kind for the employee, provided the function is open to staff generally and costs do not exceed £150 per head (including VAT). Costs include not only the event itself, but also any transport or accommodation provided. This total is then simply divided by the total number of attendees, both employees and non-employees, to find the cost per head. If this is over £150, the whole amount and not just the excess is taxable on the employee.
Just one other word of warning, the £150 threshold applies across all staff functions throughout the year. The cost-per-head exercise needs to be done for each event, and if the cumulative total exceeds the £150 limit, a taxable benefit in kind will arise.
Date: 12th December, 2012
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