In the Know: Annual Party Tax Exemption for Limited Companies
Published on Monday, December 1, 2014
To give a little back, HMRC allows a tax exemption to Limited Companies for each employee up to the cost of £150 towards the expense of attending an annual work event or events. This applies to all Limited Companies - small or large.
You may claim expenses on your annual party, as long as you comply with the following criteria:
- It is an annual event(s)
- The event(s) is open to ALL of the employees within the company
- The cost per head does not exceed £150
The £150 per employee can cover the cost of travel to and from your event, accommodation if it is necessary and any food or drink consumed. Although we are writing this within the Christmas period, your ‘annual event’ does not necessarily have to be held during the festive month of December.
This can be an event at any time of the year, so be it an annual one. Furthermore, the £150 exemption per employee can in fact be split across the year and not just held accountable for one event. For example, you could hold an employee summer BBQ as well as a Christmas get together, and your limited company would still qualify for the exemption as long as the limit per employee is not exceeded.
Do be careful however; if the cost per attending employee exceeds the threshold, the exemption will no longer apply. In order to qualify for this exemption you will have to claim for the whole cost incurred in the party and much like other expenses, be sure to keep all receipts.
If you are registered with the flat rate scheme this exemption still applies to you, however you are of course unable to reclaim the VAT on this expense. In order to ensure that you have kept within the threshold, HMRC state you should use the following calculation: Divide the total cost of your event by the number of employees that attended.
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