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HMRC Christmas Party Allowance For Your Limited Company

Christmas is nearly here and as it’s an expensive as well as a jolly time of year, we thought you’d appreciat a tax break with regard to your company Christmas party.

HMRC allows a tax exemption of £150 per employee for a Christmas party. As a gift from her majesty, an employer can spend up to £150 per employee tax free, which is separate from any additional deductions from corporation tax.

The tax exemption applies whether you are a multi-national or the only employee and even includes guests of the employees, tax and NI-free!

A Christmas party does not necessarily have to constitute a party; it could take the form of a meal or entertainment. Just make sure the total cost per head stays under the £150 per head. If the cost per head exceeds this exemption even by £1, then the full amount would become a benefit in kind for the employee and tax and NI would be charged.

The cost per head is calculated as:

  • The party/function
  • Transportation or accommodation included
  • Divided by the number of people in attendance
  • The restaurant or hotel should be booked in the company name and if the £150 limit is at risk of being exceeded, the director should be authorised to pay the bill personally and claim back only up to £150 per head from the company – supported by receipts.

If you have any questions about the above, why not get in touch to see how we can help you save this yuletide! A very merry Christmas to you all. Hope to see you in the new year!