Are you one of the more than 80% of UK businesses hosting a Christmas party for employees? Don’t fall foul of the HMRC rules about parties and events for employees with our Christmas party tax tips for 2023.
It’s easy to get caught out with this one, because there is a limit of what you can spend on employee hospitality, but it applies across the tax year, not per event as people often think.
Christmas party tax tips 2023
- The spend per employee must be less than £150 per head so there is no taxable benefit for the employee.
- If it’s over £150 per head, then the employee needs to be taxed on the full cost.
- The £150 per head is per tax year so it’s important to factor in any other “annual ” events you might have done in that tax year.
- The tax year started on 6 April 2023 and ends on 5 April 2024.
Remember, even though client entertaining is generally not an allowable expense for corporation tax purposes, the cost of employee entertaining is an allowable expense. This means 𝙩𝙝𝙚 𝙘𝙤𝙨𝙩 𝙤𝙛 𝙩𝙝𝙚 𝙨𝙩𝙖𝙛𝙛 𝘾𝙝𝙧𝙞𝙨𝙩𝙢𝙖𝙨 𝙥𝙖𝙧𝙩𝙮 𝙘𝙖𝙣 𝙗𝙚 𝙙𝙚𝙙𝙪𝙘𝙩𝙚𝙙!
As always, things might not be quite this simple with HMRC, so contact your local AIMS Accountant if you want further clarification about your Christmas party or tax in general.