Ilyas Patel Accountants in Preston
Is your office in a festive mood?
A festive get-together is a wonderful way to strengthen your staff’s bond and celebrate the completion of the year.
Learn about effectively planning a Christmas Party, tax FREE.
(Read Time: Approx. 3 minutes)
End-of-year staff parties are not just about fun and games; they are essential for building team spirit and reflecting on the year’s achievements.
Whilst you might consider various themes, from black-tie to fancy dress, it’s crucial to add another item on your checklist: tax efficiency.
Yes, your annual corporate celebration can actually be tax deductible, allowing you to indulge in the festivities without worrying about the financial aftermath.
To ensure your Christmas party is tax deductible, it’s important to follow a set of HMRC guidelines.
The golden rule is inclusivity: the event must be open to all employees.
This means no exclusive gatherings for just directors or select staff (unless all your employees are directors).
Also, the event should be purely for entertainment, without mixing business and pleasure.
If clients or customers are invited, make sure your staff are not in a work role during the event.
If your company enjoys celebrating multiple times a year, it’s essential to keep a keen eye on the cumulative costs.
For instance, if you hosted a summer barbeque costing £75 per head and plan a Christmas gala with the same budget, you’re perfectly aligned with the tax deduction guidelines.
However, suppose the Christmas event’s expenses unexpectedly rise to £100 per head.
In that case, the more expensive event falls under the tax exemption, whilst the cost of the summer event becomes a taxable Benefit in Kind for the employees.
Pandemic restrictions reshaped the way we celebrate.
Fortunately, virtual Christmas parties fall under the same tax-deductible category as traditional in-person events.
This means you can get creative with online celebrations.
Consider sending out gourmet hampers to your staff, organise an online concert, or even a virtual escape room.
The key is to maintain the spirit of togetherness and celebration, even if it’s through a screen.
Whilst the restrictions may be over, virtual offices still exist today, so organising a virtual office party is still commonplace.
When planning your tax-deductible party, consider other elements such as gifts to employees or charity donations.
These can also be tax-efficient and enhance the overall experience of your festive event.
Remember to keep records of all expenditures to ensure compliance and ease in claiming deductions.
Contact us today at 01772 788200 to find out more about how we can help, or WhatsApp us out-of-hours at 07787 010190.
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Kind regards,
Ilyas Patel