There are some people who love staff parties - the chance to mingle with management, let their hair down with their co-workers and flirt with the boss. There are others who would rather pull out their own fingernails than put away their disdain for their colleagues by joining in. Whichever type of employees you have, not even the most fervent party animal wants to pay tax on the privilege of attending.
As you know, most benefits in kind are taxable to the recipient. However there are a few exceptions and the staff summer or winter parties are one of them - as long as you remember follow the rules.
To make sure your party remains eligible for HMRC’s exemption, you need to ask yourself the following questions:
You're allowed £150 per person a year, a figure that hasn’t changed since 2003. If you go over by even £1 per person, you will not be able to claim. What’s more, your staff will have to pay tax and national insurance on the whole amount, so double check your figures for the total cost, and then divide it by the number of people who will be attending.
The £150 counts for all annual parties, not just the Christmas or summer one. So, if you’ve already treated your staff to a Christmas ball or some other festive frivolity and spent £100, you only have the remaining £50 to spend during summer.
To qualify, it must be something you either have each year, or plan to do so.
Every single employee must be invited. If any are excluded then you can't claim your exemption.
Although you are allowed to invite customers and partners of employees, the party must be mainly for your staff. If there are more ‘others’ than staff, your claim will fail.
The above is a very brief guide to the rules of exemption. To find out whether your party will qualify, please get in touch.
Remember, we work for you, not the revenue.