Tax Facts, National Insurance Contributions and the paid-for Christmas Do

First published on 11 December 2019 by Alastair
  • Categories:
  • General News
  • Staff News
  • News

It’s party season: a time for celebration and enjoyment. But, organising these events can sometimes be stressful, and occasionally things get overlooked, or pushed down to the bottom of the ‘to do’ list. The tax and NIC consequences of the annual Christmas bash, where the company is footing the bill, is one such thing.

A Christmas party, lunch or dinner, where the business is picking up the tab, can potentially generate a tax and NIC liability, but this can be avoided if all of the following conditions are met:

  • The total cost of the event, including any travel and accommodation, does not exceed the average cost of £150 per attendee (including VAT).  Guests are counted as attendees.
  • The event is open to all staff.
  • You intend to host a similar event annually, and you do not have any other annual events that have already used up (or will use up) all of this tax-free benefit.

Worth knowing about!

And these rules also apply to directors, so even if you are a one-person band, you can still treat yourself to a Christmas lunch! In fact you can invite several people if you wanted to as long as the cost is less than the magic £150 per head and providing you intend to do it annually. One off events don’t qualify

If you think that your business may not meet the conditions and you are unsure on how to report it, then M&S Accountancy and Taxation is here to help.

P.S. Remember, this only applies to instances where the company is paying. Your Christmas club is safe!

Recent Posts