How to save tax this Christmas with a staff party

This year’s Christmas holidays are fast approaching, have you planned your break yet? Working independently often means you have to plan your time off around quiet times for your clients like Christmas, and we have some good news for you.

Planning for holidays

If you’ve been working hard during the year, then it’s time to enjoy a well deserved break with your loved ones. To help you prepare your wallet for the festive season, we’ve written a short guide to planning and budgeting for your scheduled absence.

Splash out on a festive treat

To sweeten your holiday time HMRC allows you to spend up to £150 per employee tax-free on annual entertainment events, including your Christmas party. As an added bonus, this also includes drinks, transport and accommodation that you provide in addition to meals.

The only small catch is to ensure that you spend no more than £150 per person – if you go just a penny over you’ll lose all of the tax benefits. Other than that, HMRC’s rules are straightforward – you just need to ensure you meet the following criteria:

  • The Christmas party, or other event, must be annual and open to all employees of your company.
  • It’s not an allowance – you cannot just claim the amount as-is, you must claim for an actual meal or event and provide receipts.

More good news:

  • All employees and directors can invite partners who don’t work for the company and also claim for their costs – so that’s £300 per couple.
  • The entertainment is not just for Christmas parties. You can claim the cost of any annual event or even combine your winter celebrations with a summer event – as long as the combined total per head per year is £150 or less.
  • If you’re a one person limited company you can still claim back the cost of an annual party, plus the allowance for a partner applies too. That means you can indulge yourself and your partner on a £300 tax-free festive soiree. Cheers HMRC!

Here you can read the full details of reclaiming the cost of a Christmas party.