Claim Your Office New Year Party Expenses as a Business Expense
Whether you are planning New Year party for your office staff?
Whether you want to arrange some great stuff like food, drinks and dance floor but thinking about the expenses?
Don’t worry as you can claim all your New Year party cost as a business expense. Isn’t it great?
Ways to Claim your New Year Party as a Business Expense
There are various ways by which you can claim your New Year party cost as a business expense. Exemption for tax relief mainly depends upon the number of employees attending the party. You need to meet the following criteria in order to qualify for the exemption -
Cost per head = Total cost of New Year party/Number of people attending
For example – Suppose your company arranges a New Year party which cost £80 per head and a summer party costing £90 per head. You can apply for tax relief only for one of the parties as total of both the party expenses exceeds the total cost per head.
What happens when total cost in a New Year party exceeds £150 per annum?
When total cost of the expenses incurred in a party exceeds £150 per head annually, then both employer and the employee has to face serious tax implications which includes additional tax & national insurance bill of £140 per person.
Employee needs to pay tax unless employer signs a PAYE settlement agreement with HMRC in order to meet the tax liability. In PSA agreement, tax liability will be calculated on the grossed up amount.
Director & employees taxes are charged on the basis of their expense share of a party event under normal circumstances but here are some exceptions to this –
There is no tax levied on the staff when employer offers an annual party or a New Year party for the staff. You can reclaim any VAT on the expenses incurred in the New Year party event which cost less than £150 per head. In case you have organized more than one party in a year, then also you have to make sure that total cost per head must not exceed £150, if you really want to claim this tax relief.
Any Questions? Request a callback from our Tax Experts.
