Who pays for the work Christmas party?

Written by Mike Gallagher
8 December, 2021
Christmas Party

Who pays for the Work Christmas Party?

The work Christmas party is an integral part of the festive period and can have substantial benefits for a business.  Employees get to relax and business owners can demonstrate their appreciation for the hard work over the year.  The celebrations often build bands between staff and of course increase staff morale and appreciation of the employer.  However, the Christmas Party can also have some financial benefits for the business itself.

Key Accountancy Services

Our friends at Key Accountancy Services are experts in helping businesses utilise tax benefits and helping businesses thrive.  A little-known tax exemption applies to annual parties and functions, this exemption can of course be used in relation to the Christmas party. 

Christmas party

Who pays for the work Christmas party if there is a tax exemption?

There are however conditions that must be met in order to benefit from the tax exemption.

1. The function must be annual

The exemption only applies to annual functions. If you hold a Christmas party every year, the exemption will be available. If, however, you decide to hold a one-off event, the resulting benefit will be taxable.

2. £150 per head limit

The exemption only applies if the cost of the function is not more than £150 per head. This is the total cost of the function (including VAT) divided by the number of people attending (guests as well as employees). If the cost per head is more than £150, the full amount is taxable, not just the excess over £150. If the employee brings a guest, the taxable benefit is the cost of the employee’s attendance at the event, and also that of their guest.

gifts wrapped

Nominal Gifts

Should an employer wish to buy their staff a gift to help spread the festive cheer don’t forget that you can benefit from another tax exemption, the Nominal Gift.

Where you buy a none performance related gift for an employee the whole sum of that gift will be tax-deductible providing that:

 

  1. The gift is not in excess of £50 
  2. The gift is not cash or cash vouchers
  3. The gift is not related to performance

The team at Key Accountancy are of course available to help with any queries that you may have in relation to tax and our lawyers are of course on hand to help with any HR headaches or additional ways to help spread festive cheer within your business. 

Employment Law Solutions

Christmas is, of course, a time for “peace on earth and goodwill for all men” but where necessary employers are advised to uphold their normal standards, to apply rule consistently and fairly and to ensure that everyone has a pleasant festive period.  Of course Employment Law Solutions remain on hand to support any employers who may have the unpleasant task of dealing with HR Headaches at this time of year, call us on 01270 781 006

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An employer’s guide to the work Christmas party

When considering the work christmas party it would be easy to fall into a spiral of rulemaking and declaring fun absorbing dictats of course, not to control the fun or quell the festive spirit, but rather to try and prevent any HR headaches throughout the festivities and into the New Year to ensure everyone has a good time.