Looking at the weather forecast, with the (hopeful) appearance of some summer weather why not treat your employees to a summer party?
An employer may spend up to £150 per head (inclusive of VAT) per year, in providing annual functions and events to entertain its staff.
Provided the £150 limit is not exceeded, there can be any number of parties, for instance, a summer party & Christmas party at a cost of £75 each.
What about the position for your employees?
If you provide employees with a perk – such as a staff party – it’s a taxable benefit. But as you’re probably aware, an exemption applies. The main conditions of the exemption are that:
- the party or similar is an “annual” event
- all employees are invited (but separate events can be held for different departments on different occasions)
- the average costs (including transportation and other related expenses) of the event (events if there’s more than one in a tax year), per head for all employees and guests attending does not exceed £150 including VAT.
It is important that you do not exceed the £150 as this is not an allowance and so if the cost per head works out at £152 the whole amount will then become taxable as a Benefit in Kind.
For help and advice on tax allowances for businesses please contact the Business Services team from CKLG your Cambridge-based accountants and tax advisers on 01223 810100 or via our contact form for friendly help and support.