It is often said that a business’s greatest strength is the people who walk through the door every day. The employees are often the first encounter a customer has with a company, whether it’s on the phone or in person or, these days, by email or even social media.
They are the public face of your business and crucial to its success. We think Christmas provides the ideal opportunity to say thank you to them for all their hard work. And guess what? Even the taxman thinks that too, allowing Christmas parties to be counted as an allowable expense.
The rules are fairly simple and allow businesses to reward or motivate their staff with an annual event, typically a summer or Christmas function. The kind of event involved can be a staff party, team building exercise or staff outings and covers food and drink, accommodation and transport.
HMRC says it has to be available for all staff in the company in order to attract relief. It’s acceptable for different events to be held if you have staff in different locations, as long as they remain open to all employees. If the directors decide to hold an event just for themselves, it won’t count as a business expense.
HMRC puts an annual limit of £150 expenditure per person which can include non-employees such as spouses. If you spend more than that, then it could become a taxable benefit for your staff.
It’s clear that plenty of fun can be had within HMRC’s £150 per person exemption. If you’re really clever, you can split the benefit and hold two events a year for staff.
Christmas cracker anyone?