Limited Company Christmas Party Allowances

As December begins our minds start turning towards the big day, many business owners seem a little confused as to what Christmas cheer they can provide for their staff and customers.

What are the limited company Christmas party allowances?

The fun-loving guys at HMRC will allow you to spend up to £150 per employee on a Christmas or other party (hooray).

This can be split over more than one event and can be spent any time of the year if the total spend per employee is not higher than £150.

One thing to be mindful of is that if you spend 1p more than £150, the entire amount becomes disallowable not just the overspend. You need to ensure that you keep an eye on the spend and be sure to retrieve your company credit card from behind the bar!

If employee’s husbands/wives/partners are invited, this expenditure will be allowed for tax.  You must remember that the total expenses for the party amounts to no more than £150 per employee.

If you are a generous boss who chooses to treat your hard-working employees to a well-earned bonus this festive period, this must be paid through the payroll system and taxed in the usual way any other gifts must be included on a P11d form.

Customers Gifts

The Jolly powers at HMRC will allow you to give a business gift that must carry a conspicuous advert for your company for it to avoid being classified as entertainment expenses which would not be allowable. The gift can cost up to £50 to any one person in any one tax yChristmas basketear.  For example, diaries or pens.  Food, Alcohol and tobacco or vouchers that can be exchanged for food, alcohol or tobacco are not allowable for tax purposes. But again, beware the Grinch!  Should your well thought out gift cost more than £50 the whole amount would be disallowed.

This is not to say that you cannot buy food, alcohol or tobacco it will not be treated as a tax-deductible expense in your tax computation.  We all appreciate that giving customers gifts at Christmas is always a good for customer relations.  In our busy and professional office, we can always be tempted for our stationery order by a free box of chocolates or sweets.

This year has been a busy and productive one at Wurkplace and we are all looking forward to attending our Christmas Party.  I would like to take this opportunity to wish you all a fantastic Christmas and a Happy and prosperous New Year. Should you find yourself addressing any issues that arise following your festive outings see our Work Night Out Blog which should be able to assist with any situations that you may stumble across.

For further guidance on what the limited company Christmas party allowances are, call our qualified finance advisers on 0330 400 5490 or email ceri@wurkplace.co.uk

Blog written by Ceri Wilson.

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