If you want to provide an annual Christmas Party or Summer BBQ to your staff it is important you understand the HMRC rules governing the provision of such events. If not your staff may be taxed on the event, which would not be consistent with your original intention.
Requirements to ensure the event is exempt from tax and NI:
Annual event (irrespective of the timing in the year);
Open to all employees (and their spouses or additional invitee);
Could be different events for different company branches in different locations, as long as overall they are open to all employees;
Less than £150 (incl VAT) in total for all events in the year;
Amount includes VAT, transport to the event, accommodation.
By default, this means:
An event exclusively for one group of employees is not exempt, the benefit is taxable to those employees attending that event;
Where the total cost per person, over all events, is greater than £150, the amount needs to be reported on the individual’s P11d;
An event which is a ‘one-off’ (eg a 25th anniversary, retirement party) is not annual, meaning it will not be exempt;
An event held every 2 years does not meet the requirement of ‘annual’, meaning it will not be exempt;
Where the cost per person is greater than £150, the cost of any family members in attendance will be reported on the P11d of the employed individual,
Benefits under £50 could be classed as ‘trivial’ and exempt from being reported on the P11d, however it should be reported on the company’s PSA. They must be:
Minor (eg birthday cake);
Irregular (eg relocation costs for an employee – subject to its own limits £8,500);
Impractical to calculate.
For more information please contact firstname.lastname@example.org