Content
U-Turns Galore
Premises, Promises
Filing Bonus
RIP: 0% Rate
His and Hers
Party Spirit
State Of The Union
VAT's The Point?
Going Dutch
Away Win For Revenue
WIP-Round
The Best Land Plans
Tax Free Gizmos
Where Theres A Will
Do You Work Here?
Out Of The Shadows
Sacrifice Works
Home Sweet Office
Sauce For The Goose
Blissful Ignorance
PC Or Not PC?
Lost On Penalties
Worth The Paper
Carry The Can
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The season for Christmas parties is over, but settling the tax effect is something that has to be done in the New Year. It's well known that there's a tax-free limit for staff parties, but the details of the rules are quite complicated. First, the rule is that the employees don't get taxed if the party costs no more than £150 per person attending. It isn't per employee - so if every worker takes "the other half", the cost can be £300 per employee but still no-one is taxed. Next, the £150 includes all the costs associated with the event such as transport and accommodation, and also includes VAT - even though the business can recover the VAT in respect of the employees attending, and can recover all the VAT if a "more than nominal" charge is made to the non-employees. The VAT is always included in measuring a benefit-in-kind. It doesn't have to be a Christmas party, but an "annual event" - and you can have a series of cheaper events as long as the total is not more than £150 a person. It has to be something that is put on for all the staff, rather than a smaller group such as the directors. If you go over the limit, the whole event becomes chargeable. That's a critical issue - suppose you have an annual event with ten employees and their partners, and you budget £3,000 for the twenty people attending, and one couple doesn't show, then the whole cost is divided between the nine who attend. You might have to invite a few passers-by to join in at the last minute! If you want to discuss the tax treatment of staff entertaining or any other benefit-in-kind, we will be happy to help.  |
© Bayar Hughes & Co., 2010.