Claiming Christmas Party Tax Allowances

With office parties in full swing, did you know your business can benefit from tax exemptions when hosting a Christmas party?

Here’s how you can make the most of it:

1. Annual Staff Event Exemption

HMRC allows businesses to claim up to £150 per head (including VAT) for staff events, tax-free. This covers costs like the venue, food, drinks, travel, and entertainment!

2. Who Qualifies?

The event must be open to all employees or a specific department. Contractors, clients, or self-employed workers aren’t eligible.

3. Maximise the Allowance

• The £150 per head limit must include all costs—don’t exceed it, or the entire amount becomes taxable as a benefit.
• This is an annual allowance – you can’t claim £150 twice for different events. However, multiple smaller events can qualify as long as their combined cost remains within the threshold.

4. VAT Claims

VAT-registered businesses can reclaim VAT on staff-only expenses. However, VAT for non-employees (e.g. guests or partners) cannot be reclaimed.

Final Tip

Keep detailed records, such as invoices, receipts and attendee lists, to ensure you can evidence compliance with HMRC rules.

Celebrate with your team while staying tax-savvy this holiday season!