How to host a Christmas party and save tax

christmas party

We know it’s a bit early to be mentioning the C-word. But, many limited company owners are unaware that HMRC allows you to reward your employees (and their partners) with annual events; such as a Christmas party. Even if you’re a one-person company you can still claim back the cost of annual company events – so why not treat you and your partner to a festive soiree?

Getting into the festive spirit

HMRC allows you to claim up to £150 per person (including VAT) for annual events per year. So you could host one huge Christmas party, or combine your winter celebrations with a summer event – as long as the combined total, per head per year, is £150 or less.

This can include food, drink, transport and even hotel stays. Better yet, it can also be claimed for partners who don’t work for the company – so that’s £300 per couple.

Full HMRC details on annual parties can be found here.

What’s the catch?

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 event must be annual and open to all employees in your company
  • It’s not an allowance, you’ll still need to claim for an actual meal or event and provide the receipts like any other expense

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 shindig.

You can read the full details of reclaiming the cost of a Christmas party here.