Cookies are small text files that are stored on your computer when you visit a website. They are mainly used as a way of improving the website functionalities or to provide more advanced statistical data.
It’s that time of year again when people start thinking of Christmas Parties. So what can you actually claim as a ‘business expense’?
Employees only
Unfortunately, you have to be an employee in order for the Christmas party to be tax deductible. Therefore, this excludes sole traders, partners in a partnership, sub-contractors, clients or suppliers. If you are a director of a limited company, you are an employee and therefore you are entitled to the annual party exemption.
How the annual party exemption works (ITEPA s264)
This allows expenditure of £150 per person per year on parties to be deducted from profits as a business expense. For this to be allowed, the following must apply:
- The people attending the party or function must be current or retired employees and their partners.
- All employees must be invited.
- The amount of the expenditure when added to previous ‘party’ expenditure of that year must not exceed £150 per head in total. E.g. If you spend £60 per head at Easter, £60 per head in the Summer and £60 per head at Christmas, the whole amount at Christmas is NOT exempt.
The cost of a party/function includes transport, any overnight accommodation and VAT.
Please see our previous blog about entertainment costs: http://www.ace-accounting.co.uk/blog/business-expenses/food-and-drink-subsistence-entertainment/
