How a Merry Christmas could save you thousands in taxes
- December 29, 2016
- Posted by: admin
- Category: Business Growth, Contractors, Expenses, Start-ups
Hope you enjoyed your Christmas and are looking forward to a prosperous new year.
Did you have a Christmas do? Or Christmas outing with your colleagues?
What if you were able to claim your Christmas party cost as a company expense? I can almost hear you saying ‘yes please’.
Ok! There is no specific allowance for a ‘Christmas party’ as such, however HMRC does provide limited tax relief for the cost of holding an ‘annual event’ such as a Christmas for your company, providing certain conditions are met.
However, the per head cost for yourself, any employee, director or partner cannot exceed £150 (including VAT).
You may hold several events over the course of the year, however the aggregate cost cannot exceed the threshold of £150 per year. So, in other words you may want to claim an event for the summer instead of Christmas. So make sure you still have copies of your receipts.
Example:
We recently had a client (a recruitment firm) who took their staff of 10 out for a Christmas lunch. The average cost per head for each employee on the night was £120. If we multiply the numbers by the number of employees, then the figure the company claimed as an expense was £1,200. This results in a tax saving of £240.
For a detailed explanation of the annual event expense rules, click here (HMRC).
The rules governing business expenses are complex, so do contact your accountant if you have any questions about what you can and cannot claim against your company’s Corporation Tax bill.
I hope that helps!!
Enjoy the rest of the holidays.
Regards