subject: How To Avoid Cutting The Office Christmas Party Through Taxable Benefits [print this page] Worried about your companys budget? Thinking about cutting the annual Christmas party? Wait a second, you dont have to by paying it through taxable benefits, which pays up to a particular amount per person at a Christmas party or another event, without you being taxed.
If you are still profiteering, even a little, it is worth looking into taxable benefits for Christmas parties, summer parties and spring parties. The only criteria is the fact that it has to be an annual event, so sadly no one-off event can be covered by this benefit. It also has to be open to all employees. A taxable benefit means you are able to claim the cost of the company party against your tax bill, as long as it is within a certain limit.
Every company in the U.K has a right to the maximum tax allowance of 150 per person including VAT. The only exclusions to this tax benefit are sole traders and companies with no employees (i.e. just directors with no employees).
There are, however, a number of rules to follow in order to qualify for taxable benefits for staff parties. The first limit is that you are allowed a maximum of two parties per year and sadly, regular meetings down at the local restaurant or bar are exempt. Moreover, HM Revenue and Customs also work out taxable benefits in a tricky and confusing manner, as rather than based on preliminary numbers, it is based on actual numbers turning up (total cost divided by number attended). Thus, if people dont turn up, you could end up losing out on your taxable benefit.
Another con is imposed upon the limit. If you go over the 150 limit per person even by a pound, you are liable for tax. Spending over the (per person) limit could mean you end up spending double on your Corporate Christmas party. So if you think you may end up going over the limit, it may be just worth forking out yourself for the Christmas party, rather than the cost being doubled by taxable benefits.
Although there are a few cons to taxable benefits (i.e. it may be risky) there are a number of benefits too. For instance, the 150 per head includes any partners or husbands/wives attending the party, thus not just limiting the party just to the corporate staff. You can also spend that 150 per head on anything you like (as long as party related), including accommodation, food, drink, venue, entertainment and travel as long as it is within the limit.
by: Marie Coles
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