As we move into party season there are a number of issues which are pitfalls in planning the Christmas party. Some of the facts follow:
- You may claim £150 including VAT per person per annum
- This may cover more than one event providing the total does not exceed £150
- The cost should be claimed as staff welfare for corporation tax purposes
- There is no charge to the employee as a benefit in kind
- Corporation tax is allowable in full
- Input VAT may be reclaimed on the event
However this may go wrong in the following circumstances:
- The total cost must include costs of the function from beginning to end, including travel and accommodation
- All staff must be invited (ie no restriction, except by branch/office if applicable)
- The average cost is based on who attends the function so beware if there is snow, half the people cannot make it and the average cost doubles
- £150 is an allowance, so if the average cost works out at £151 the full £151 will be charged to the employee as a benefit in kind
- VAT cannot be claimed for non-employees (ie guests and customers)
Our recommendations
- Keep full records of all costs incurred in the event
- Keep a record of the attendees
- Ensure all staff are invited
- Make staff aware that if they do not attend there may be a benefit in kind charge
This article highlights some of the main points to consider but may not apply to your specific circumstance so please seek professional advice before taking any steps based on the information shown. If you would like advice in this or other areas feel free to call. Alastair Wood, AW Accounting, Gravesend – Accountants who “speak your language”