How to have your Christmas cake and eat it!

You may be aware that there is a situation where entertaining staff is both tax deductible for a business and a tax free benefit for its employees and this refers to the HMRC allowance for an annual event (not necessarily a Christmas party, we all enjoy a Summer Ball too!) that costs no more than £150 including VAT per employee.

Are you also aware of the changes introduced from 6th April 2016? An employee benefit in kind is now exempt if it costs less than £50. There is now no excuse and at R & J Business Solutions we will be going out for a Christmas meal, New Year drinks, Birthday meals and having a big bash in the summer without worrying about the tax consequences, just watch the sore heads on the morning after!

Finally why not combine a staff event with entertaining suppliers, customers and other people associated with your business. Entertainment (not including employees mentioned above) is not an allowable expense, however, if your supplier splits the costs for you and you can show that an element of the invoice is directly attributable to your employees this element would be allowable and so you can actually have your cake and eat it, if that cost is below £50 per person, as mentioned above there is no taxable benefit in kind for the employee. In this knowledge go and have fun, but stay safe and please drink responsibly!

Happy Christmas and have a very prosperous New Year!