The Institute of Chartered Accountants in England and Wales (ICAEW) has urged employers to consider the tax implications associated with a seasonal party.
A company end of year party can be a great way to celebrate the festive period, as well as employees’ hard work. However, there are certain conditions to consider in order to ensure the event is as tax-efficient as possible.
The total cost per employee must not exceed £150 (including VAT, accommodation and transport). This also includes the costs for employees’ guests, if they are invited.
If the party does cost more than £150 per employee, the full amount spent on the event will be liable to income tax and national insurance. The seasonal party must also be open to all employees based in that location (separate departmental parties are permissible).
The party must be an annual event: however, if you have more than one annual event (for example, a seasonal party and a summer party), the cumulative total must be £150 or less per employee.
The ICAEW added that, in regard to gifts for employees, only those deemed ‘trivial’ are exempt from tax.