Claimable party expenses

Claimable party expenses

By Published On: 7 December 2021Categories: Small Business Owner, Social, Tax, VAT

The season to be merry and bright is upon us, and who doesn’t love getting together to let your hair down and have some fun?

But when it comes to partying during the festive period, are you allowed to claim your party expenses? The answer is ‘yes’, but there are some rules you must abide by. In this blog we outline the dos and don’ts to having a good time this festive season, courtesy of HMRC.

Allowable business expenses

HMRC usually like to take money from small businesses, so it may come as a surprise to learn that when it comes to entertainment costs, they are rather quite generous. Before you start planning a festive party that even Father Christmas would be RSVPing to, there are a number of rules you must stick to.

The rules

As a director of your own Limited Company, you’re able to host events throughout the year, which are exempt from Tax and National Insurance, so long as you abide by the following:

  • The total cost of all events collectively throughout the year do not exceed the limit of £150 per person
  • The event is annually reoccurring
  • All employees are able to attend
  • The £150 limit must include VAT, and any other additional costs such as travel and accommodation
  • If you’re not able to physically attend an event, or because of current circumstances would prefer to host a virtual event, you can send each employee a hamper, or box of wine for example, up to the value of £150
  • If you or any of your employees are part of a salary sacrifice scheme, you have to report the amount to those employees

What if it’s just you in your company?

As long as the event you’ve planned follows the above rules, then you’re still allowed to enjoy yourself, free from Tax and National Insurance.

What if you have employees?

There are no limits to the number of employees you can invite.

Remember! The cost of an event is an exemption, not an allowance

The £150 is an exemption, not an allowance, so don’t be tempted to go over the limit. If you do, even by a penny, the whole expense will be subjected to Tax and National Insurance, so don’t be tempted to party like a rockstar!

It’s simple to calculate the cost of your event:

If it’s just for you – total up all of the associated costs

If it’s for you and your employees – add together all costs, and divide it by the total number of employees to get the cost per head

Vantage’s final thoughts

Remember that whilst it would be lovely to have the £150 limit per event, it’s per year, so you could have multiple events, but only the £150 once.

How can your Vantage accountant help?

No one likes to be out of pocket, especially at this time of year, so before parting with your cash be sure to run your party plans past your Vantage accountant.

As a Vantage client your expert advice and support is only a touch of a button or phone call away, we might even be able to suggest some good local venues for your party to take place! Get in touch with the team today.

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

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