Can my business claim for a Christmas party?

There is no specific tax deduction for a “Christmas party” but HMRC does allow a measure of tax relief for “an annual event”.

Staff entertainment is normally treated as a “Benefit in Kind”, and directors and employees have to pay tax and national insurance on the amount of the benefit.

Here’s the one way to avoid a “Benefit in Kind”.  As a company director, you are entitled to provide an annual event for yourself, any staff you employ, and your partner, and to reclaim the costs against the company. Proved that the cost per head does not exceed £150 (including VAT) then you can claim it. If it’s one penny more then the whole amount does not qualify, so be sure to stay within the limit.

It can be any one event, or a combination of events, and it doesn’t have to relate to the Festive Break. However, you do actually have to hold an event in order to reclaim the costs against your company. You can’t simply make a cash claim for £150.

For a detailed explanation of the annual event expense rules, check the HMRC site here or get in touch with us.