Christmas Party. Do you know accounting rules with regards to Xmas parties, what can be deducted?

Xmas party time is almost upon us. Obviously depending on the current situation due to the Coronavirus, you may want to invite your employees to the Xmas party; if allowed. It is an exceptionally good way to show your employees appreciation and to build a team spirit.

5 reasons to have a Xmas party:

1. The costs are qualifies as expenses –  The costs per employee cannot exceed £150 – including meals, transport, and overnight accommodation
2. You can deduct additional £150 per partner invited by your staff – cost is per ‘head’
3. By deducting cost you lower your corporation tax
4. Employees will appreciate you, you build good working environment and potentially your employees will identify with your company and may be more loyal
5. Potentially you can claim back the VAT   

You must remember few important BUTs:

1. The cost per person cannot exceed £150.00, even for a penny
2. Limit of £150 is applied to all the parties, so if organise more than one total annual cost per head is £150
3. You have to keep all the receipts; you cannot just deduct £150 without the proof
4. The party has to be open to all employees, not only directors, unless all your staff are directors
5. The party must take place, you cannot just plan it

If you need any more information, please contact me.

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