Can you claim your festive celebration as a business expense?

Can you claim your festive celebration as a business expense?

By Published On: 9 November 2023Categories: Limited Company, Small Business Owner, Tax

The festive season is approaching and many Limited Company directors are starting to prepare for their yearly celebrations. Fortunately, HMRC recognises staff entertainment as a valid business expense, but your festivities need to follow certain rules to qualify for tax and National Insurance exemption.

What are the rules?

 To be considered a legitimate business expense, your event must adhere to the following:

  1. The total event cost must not exceed £150 per person annually, including additional expenses like travel and accommodation.
  2. The event must be open to all employees.
  3. It must be held annually.
  4. If any of your employees participate in a salary sacrifice scheme, the event’s value must be communicated to them.

Regardless of whether your event is in-person or is held virtually, the same rules will apply.

Are there attendance limitations?

Provided that the rules are followed, there is no limit to the number of employees that can attend the event. In fact, you are even able to extend invites to others such as family members, so long as they also do not exceed the £150 per person limit.

This is an exemption, not an allowance!

It’s extremely important to remember that the £150 per person limit is not an allowance, it is an exemption. This means that exceeding it by any amount will result in the entire event no longer qualifying for Tax and National Insurance exemption. To avoid this, it is recommended to calculate the event’s cost in advance:

  1. Sum up all associated costs.
  2. Divide the total by the number of employees in your company.

If you plan on hosting multiple events in a year, you must also keep in mind that the £150 limit applies to the entire year, not each event. To see the finer details on claiming for staff events, refer to the gov.uk website.

 How Vantage Accounting can help you

As you enjoy your festive event, our expert accountants are here to ensure you stay compliant whilst also optimising your take-home pay. To explore how the team here at Vantage Accounting can support your business, contact us today.

Note: All the information and advice in this blog post was correct at the time of writing.

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