Do you know your tax and NI liability for your annual Christmas party? We have broken it down below…
- Annual events such as Christmas parties have a £150 limit per head and not per employee (if an employee does not attend the event their £150 limit cannot be extended).
- The event must be held every year, to be eligible to tax exemption. If an employer allows partners of employees for example, the partner (although not an employee) also gets the £150 limit.
- If the limit is exceeded per attendee, the whole event becomes taxable (not just the excess). For example if the total costs is £200 per head, everything is liable to tax deduction and not just the excess £50.
- Cost per employee also includes, overnight stays and taxis.
- If there are one or more annual event, e.g. if there is there a Christmas party held in two different locations by the company (it is Christmas after all), the £150 limit per head can be extended across these. However if this is exceeded (e.g. if a company has two events, and one event is £80 per head and the other is £90 per head) then one entire event becomes taxable.
- The event must also be open to all employers, and if the employer has two sites they may choose to have two parties, please note the above rules still apply in this instance.