Let’s Party – Compliantly!

aw-rodliffe-accounting-logoIt’s that time again. Whether your company has thrived or struggled to stay afloat this year, everyone is looking for the opportunity to party and get in the festive spirit. What better way to do it than thinking about the finances! OK, there are probably better ways, however, after reading this. you’ll have the largest smile around over the Christmas period, so

Let’s Party (*compliantly*)

 

 

Every employer, no matter the party occasion, holds a legal responsibility to report National Insurance and other finances involved in the payment of these parties (and all the gifts for those star employees).

The deciding factors on what you need to report are:

  • if it’s an annual event
  • if it’s open to all of your employees
  • if it costs more than £150 per head
  • how many events you provide during the tax year
  • whether the employee is a director, and how much they earn

 

Let’s get exempt

You may be able to take it easier than some if the party satisfies ALL of the following:

  • £150 or less per head
  • annual, such as a Christmas party or summer barbecue
  • open to all your employees

You may be asking yourself, “What if my business has several offices or departments?” To that, I say that you need not worry, so long as the annual event is open to all of the staff at the given office location. As for having parties for different departments, there must be a parties for each of the departments with employees being able to attend at least one of them.

If you have more than one annual function in the same year, both under the £150 a head, then you have a decision to make on what benefits you want to be charged on. HMRC provide some examples here.

Think you may be exempt but require some professional input to be 100%? Give us a quick ring on 020 7614 3100.

Reporting

Exempt? You can skip this section.

If you aren’t exempt, you have the task of doing the following:

  • report on each employee’s P11D form – more information here.
  • pay Class 1A National Insurance on the full cost of the event

 

Gifts!

Clients

HMRC allows you to give a gift up to a value of £50 to any client in a tax year, provided it can’t be seen as ‘entertainment’. To gain tax relief on a gift, the item must be any one of the following:

  • It’s strictly business-related – no food, drink or tobacco or vouchers which are exchangeable for such items.
  • Holds a conspicuous advertisement and is not food, drink or tobacco or vouchers which are exchangeable for such items.
  • If it is part of a series of gifts, the total value of the gifts must not exceed £50.

 

Employees

Almost all gifts given to employees are taxable in the eyes of the Government. Only entertainment provided at a Christmas party, that also meets the criteria described above (in the party section), can receive some form of tax relief.

All gifts other than this entertainment are subject to tax.

There’s not much of Christmas left and chances are you have plenty to be getting on with to ensure your business gets the most out of this very busy period. Our accountants at Rodliffe Accounting can help you get the most out of your expenses and make sure you are as tax efficient as possible – making your Christmas seem more magical than ever. Just go careful when sledding down the office stairs this year.

By Matthew Perry

Rodliffe Accounting

You can contact us by email using info@rodliffeaccounting.com or on the phone using 02076143100.

Alternatively, follow us on social media, through Twitter, Facebook, Google+ & LinkedIn.

Jobs4Contractors for contractors who are on a dormant period.

Follow Jobs4Contractors on Twitter & LinkedIn.

Check out Rodliffe Accounting’s subsidiaries for other options.

Comments are closed.

© 2019 Evolution Complete Business Sales Ltd.

  Keep me updated
KEEP UPDATED

Dear visitor. Please subscribe if you'd like to receive updates and events on selling or buying a business

* we hate spam and never share your details.
×