Staff parties and annual functions

A staff party or annual function is a tax-free benefit for employees, directors (and their other-halves) providing that the following conditions are met:

  • The total cost must not exceed £150 per head, per year.
  • Cost includes VAT, transport and accommodation.
  • £150 is not an allowance, so if the cost is £151, the whole benefit is taxable.
  • The event or events must be primarily for entertaining staff.
  • It must be open to all staff (in that location, if you have several branches or departments).
  • The event is not just for directors (unless there are no employees).
  • The cost is an allowable expense for your business.
  • You can claim back input VAT (unless it is a party for just the owner) but only a proportion if the event is also to entertain customers.

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