Reclaiming the cost of a Christmas Party

HMRC allows you to reward your employees and their partners with annual events, such as a Christmas party or a summer barbecue. You’re allowed to claim up to £150 per person (including VAT), which can include food and drink; and even transport and hotel stays.

It’s straightforward to claim, here’s what you need to know:

  • the event must be an annual event and open to all employees
  • the £150 applies per person, and you can even claim for partners who don’t work for your company – so that’s £300 per couple
  • you can only claim for a maximum of £150 per person, if you claim just 1p over this the whole amount becomes taxable
  • 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
  • it’s not just for Christmas parties – the allowance applies to any annual event. You could even have a Christmas Party and a summer event too – as long as the combined total is £150 per head, or less
Even if you’re a one-person limited company you can still claim back the cost of annual company events – so why not treat you and your partner to a festive soiree or a summer getaway?

Full details about annual parties can be found in the HMRC Employment Manual EIM21690.

Entering the expense into inniAccounts

If you use the standard VAT scheme (i.e. you’re not using the flat rate scheme) please contact your account manager for advice, as there may be VAT implications.

To record the expense in inniAccounts simply claim it like you would any other business expense:

  • if you’ve paid for the event using your personal money, reclaim it via expenses on the quick entry page
  • if you’ve paid for it directly from a company account, just reconcile the transaction in bookkeeping as normal
  • when entering the expense into inniAccounts be sure that you select the category ‘staff entertainment’, otherwise you may pay unnecessary taxes