We like to be organised here at WCS, and have been hanging on for the right moment to publish our blog about the exemptions available for staff parties!
Sadly, it looks like the chances of an office Christmas party are becoming slimmer by the minute. So we’ve bitten the bullet, and have put a date in the diary for our own Virtual Christmas Party!
Of course, a Zoom / Teams / Meet get-together could be a very low-cost affair. But if you’d like to splash out, here’s what you need to know. (Normally HMRC views staff parties as a chargeable benefit, meaning they need to be declared on a P11D for each employee, and you need to pay national insurance on the value. However there are exemptions available.)
The usual HMRC ‘exemptions’ will be available for your Virtual Christmas Party
Unlike other social events, the cost of annual events such as Christmas parties, summer BBQs and annual days out are exempt. HMRC have confirmed that a Virtual Christmas Party is still a Christmas Party.
However you must meet all of the following usual conditions:
- The event is an ‘annual’ event. It can’t be a one-off event, such as a retirement party, or a team building event.
- It must be open to all employees. But whether events take place in person or online, it’s okay to have more than one event. For example, you can have one Zoom call for your Exeter branch and a separate link for your Taunton branch, or one for your office staff and site-based staff. Remember however, you must invite everyone (you should be able to demonstrate this).
- The cost per head must be less than £150 (including VAT). That’s the total cost of the event(s) divided by the total number of (planned) attendees (which can include partners or subcontractors). If someone cancels at the last minute because they are unwell, they are still included in the number of attendees. What costs must be included? Normally we’d be talking about food, drink, accommodation and travel. In 2020, you may be thinking about takeaway deliveries, online performers or entertainers.
- Multiple events can be covered during your company tax year. Normally you could, for instance, spend spend £90 per head on your Christmas party and £47 per head on a summer party. Be aware however that it’s a limit not an allowance. That means the cost is £151 per head the whole £151 would be taxable – not just £1 per head. The whole cost is still an allowable, tax deductible expense for your business.
You can also provide ‘Trivial Benefits’
Perhaps you’re thinking about providing your team with gift this Christmas? Spend £50 or less and it may be exempt at a ‘trivial benefit’. (Be aware that Directors of companies run by 5 or fewer directors cannot receive more than £300 worth of trivial benefits each year).
Nothing says 2020 like a Virtual Christmas Party!
But if you plan to spend some money, check out:
Let us know what your Virtual plans are this year, and we’ll help you see whether the exemptions apply.