Can I claim for a Christmas Party?

Can I claim for a Christmas Party?

It sounds too good to be true, but yes you can – providing certain conditions are met!

A staff Christmas party or annual function (such as a summer barbecue) qualifies as a tax free benefit for your employees and it’s also a tax deductible expense for your company.

It’s important to note that this applies only to limited companies and not sole traders.

  • The party cannot cost more than £150 (including VAT) per person and this includes any travel or accommodation expenses.
  • The party must be open to all of your employees.
  • You can also claim an additional £150 per person for a plus one for each employee, providing they are a family member or partner.
  • You can claim back input VAT on the party cost but this may be restricted where you are also entertaining customers

This is an exemption and not an allowance. This means if your party costs £151 or more per person, you won’t be able to claim the first £150 as a business expense, the whole benefit becomes taxable.

The exemption also covers the whole year, so the combined cost of all parties held in a single year cannot exceed £150 per person.

If you have any further questions, please give us a call on 01386 366741 or contact us here. We will be delighted to help!