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Christmas Chestnuts Part 2 - Parties and tax

Christmas Chestnuts Part 2 - Parties and tax
Richard Rowell
Written by Richard Rowell
Friday, 16 October 2009 10:05

Christmas time is when we often get asked about whether a party is taxable or not. The figure that you are allowed for parties each year is £150 per employee.

The £150 is based on the aggregate cost of all such entertaining throughout a tax year and includes VAT, travel, accommodation etc. This total cost of the event is divisible by the number of attendees (including non employees) to arrive at the amount per employee.

If you exceed the £150 then the excess must be reported via P11D. Even worse than that, it is not the total costs incurred minus £150 that would be reported but the cost of the functions that exceeded the limit. So if you have two events in the year at £80 and £90 each then you would have to report the lower value function in its entirety. This is an easy mistake to make when looking at staff entertaining, you have been warned.

One of the peculiarities of this regime is that everyone attending an event is entitled to £150 per annum. So employees' spouses, for example, have their own annual entitlement too!

Richard Rowell

Richard is the CEO of Dataplan Payroll Limited and is also responsible for the ideas and development of Dataplan's innovative technology solutions such as ePaysafe.

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