It’s (almost) that time of year – mulled wine, questionable dance moves, and the annual question we get asked: “Can we claim this on expense?” 🤔
Here’s the deal:
✅ The £150 Rule
You can spend up to £150 per head (staff & partners included), and it’s tax-free. Go over by just £1, and the whole lot becomes taxable.
✅ Who’s Invited Matters
It has to be an event for all staff (not just directors or the chosen few) to qualify. If it’s just the board having a fancy dinner = nope, no tax relief.
✅ Multiple Parties?
You can have more than one event (summer BBQ & Christmas party), as long as the total across them all is under £150 per head.
✅ Clients?
Entertaining clients is not tax-deductible. (We’ll cover this in a separate article)
So the magic formula is:
✅ Up to £150 per person + for all staff = HMRC approved festive fun 🤩
➡️ What if you (want to) spend more?
❌ Go over the limit, and it all becomes a taxable Benefit in Kind (BIK).
That means your employees may face a tax bill (not exactly the Christmas gift they were hoping for 🎁).
And the business might get hit too, as you’ll have to pay extra National Insurance on it.