This Company Party Thing...

[GillsMan]

So my company is allowed to treat each of its employees to annual party/parties to the tune of £150 each. I also know that if it is even a penny over, the tax benefit is wiped out. My questions are:

1. Can I pay for this on my Company Debit Card?
2. Can this be split across multiple events?
3. Is this done on a calendar year or tax year basis?

I have two employees (including me) so am intending to go for a nice meal to celebrate hard work, successful year or some other such thing.

[Notascooby]

Before someone says this has been covered and do a search.....

1) Yes - and you can go over but then you contribute the excess yourself and only claim for £150 per person (you can also take a partner if the 2nd employee isn't your partner)

2) Yes - although these are supposed to be "annual" events - hence why its usually a xmas party - it's not just £150 to use per year, so if you have an end of tax year party and summer party EVERY year then you're ok - but a random august party and next year a randon feb party isn't allowed but only every discovered if you're investigated as it's rolled up for the year within your accounts.

3) Tax year

4) Enjoy!

[Nixon Williams]

An annual event, commonly a Christmas Party, is an allowable expense for the company and is treated as a tax free benefit for
the employees providing you meet the following conditions:

• The total cost must not exceed £150 (inc VAT) per head – if the cost is just 1p over then the whole cost will be subject to tax
and NIC, not just the amount over £150
• The event must be open to all staff, although in reality that will just be you!
• Partners may be invited, but if partners are invited, all staff must be entitled to invite a partner – invited partners will count
for the £150 per head allowance.

Generally it would be advisable to limit the annual event to one a year (most clients hold this at Christmas) so that you can
easily determine the total cost to ensure it is below the £150 per head and it is easier to justify as an annual event.

If you are not on the Flat Rate VAT scheme, VAT may only be reclaimed on the portion relating to employees i.e. the VAT relating to invited partners may not be reclaimed.

However, you can hold more than one annual event and provided the total cost of all these annual events does not exceed the £150 per head allowance no taxable benefit will arise.

If you are holding multiple annual events you need to be able to justify to HMRC (if questioned) that they are truly annual events i.e. a summer barbeque, a winter ball etc. rather than just a night out for your employees every now and then.

1.Can I pay for this on my Company Debit Card?

Yes.

2.Can this be split across multiple events?

Possible, but please see above.

3.Is this done on a calendar year or tax year basis?

It covers an 'annual event' so it can be either, but as it is annual, it is once a year anyway you choose.

Alan

[northernladuk]

Even if you don't claim it as your tax deductable xmas event you can claim it as business entertainment I believe. No tax benefits but it comes out of company and not your pocket (dividends).

I would appreciate one of our accountant contingent to pick holes in/confirm that though.

[Nixon Williams]

Even if you don't claim it as your tax deductable xmas event you can claim it as business entertainment I believe. No tax benefits but it comes out of company and not your pocket (dividends).

I would appreciate one of our accountant contingent to pick holes in/confirm that though.

Basically your understanding is correct.

Tax relief is not available on entertaining but neither are you having to fund the spending from your personal taxed income.

This may help on the area of entertaining:

Business entertaining is not an allowable expense for corporation tax purposes so, whilst you can claim for any such entertaining through the company, the cost will be disregarded when calculating the taxable profits of your company.

From the owner manager point of view, even though no corporation tax relief is received, it is still better for the company to pay for business entertaining (this includes reimbursing you for business entertaining) compared to you suffering the costs personally and not being reimbursed because you are not paying for the entertaining out of taxed income i.e. net pay of dividends.

When considering business entertaining you should be happy that the costs involved are justifiable as a business expense even though no corporation tax relief is received. This would be in terms of the costs involved being justifiable compared to the expected benefits the company will receive.

It would seem un-reasonable for you to spend £5,000 on a box for the day at Old Trafford for a potential customer if it would only generate a few hundred pounds of income. In this case HMRC may deem there to be a personal benefit and tax you (the employee) accordingly. Compare this to spending £50 on a few drinks after work on the last day at your clients site which could help generate a 3 or 6 month contract in the future, clearly this would be ok as business entertaining.

Gifts to customers are also not an allowable cost and would be treated as entertainment expenses unless they meet the following conditions:

• The gift costs less than £50
• The gift must bear a conspicuous advert for your company
• The gift cannot be food, drink, tobacco or vouchers.

Alan

[northernladuk]

• The gift costs less than £50
• The gift must bear a conspicuous advert for your company
• The gift cannot be food, drink, tobacco or vouchers.

Alan

Have to start a company up called Barcode. Anything would be allowable then

[MonzaMike]

What about client entertaining

What If I buy a round of drinks for some colleagues?

What If I buy a round of drinks for my hiring manager(s)? i.e. those that could award me future business?

Are the above different or can both be treated as a business expense?

[northernladuk]

What If I buy a round of drinks for some colleagues?

What If I buy a round of drinks for my hiring manager(s)? i.e. those that could award me future business?

Are the above different or can both be treated as a business expense?

I think you missed this section of Alan's concise guide..

When considering business entertaining you should be happy that the costs involved are justifiable as a business expense even though no corporation tax relief is received. This would be in terms of the costs involved being justifiable compared to the expected benefits the company will receive.

and personally I would keep pure alcohol items out of my business books, especially bearing in mind the cost is peanuts.

[kingcook]

What If I buy a round of drinks for some colleagues?

Colleagues? You have other people working with you at your ltd co? Or do you mean other contractors? Or the client's employees?

What If I buy a round of drinks for my hiring manager(s)? i.e. those that could award me future business?

Business entertaining (as long as it's not every week, IMO)

Are the above different or can both be treated as a business expense?

They are different IMO.

[Scrag Meister]

In the not too distant future, assuming all goes to plan, I will be signing a 6 month extension.

When I get extended I take the folks in the team I work with out for beers and food and it generally costs me (my company) in the region of £300. I have always claimed this back through the company.

Not sure of the tax implications.

I personally see this as advertising as the people I work with are a lot younger and will be the ones making the hiring decisions in the future.