Government urged to extend tax exemption for social events

With Christmas party season upon us, the government are being urged to increase the tax exemption for social events, especially considering that the figure has remained the same for the last 22 years.

And now recent findings show that many businesses are now exceeding the exemption, with the cost of hosting such events increasing significantly over the last few years.

Claiming for a Christmas party

A Christmas/annual party is a great way to treat employees, showing your appreciation for their hard work throughout the year and keeping morale up.

It is also an allowable expense. There isn’t a specific ‘Christmas party’ expense as such, just one that covers any annual event. In fact, you can have more than one, just as long as you stick to the rules, such as ensuring you keep the figure for each person at a certain amount between all events.

For it to be exempt, the event must adhere to all of these rules:

• You can only spend £150 or less per head per year (If you do have multiple annual events, you will need to ensure that the combined cost is no more than £150 per person)
• It is an annual event (such as a Christmas party, or even a summer BBQ)
• Every member of staff must be invited

For more information on this, take a look at our Can I claim for a Christmas Party? page.

Current rate ‘insufficient’

The Association of Taxation Technicians (ATT) is calling for an increase in the £150 per head figure, calling it an ‘insufficient’ amount that hasn’t changed since 2003.

Many firms are now exceeding the exemption, spending up to £170 per person on their festive gatherings. Many companies in expensive areas, such as London, are finding it very difficult to come in below £150 per person.

Plus, going over this amount, even by £1, means that it is lost in full.

The ATT is therefore calling on the government to increase the exemption to £200 and to look at reviewing this figure regularly, increasing it at least every five years.

To find out more about contracting, please contact Jaime on 01442 795 100 or email jaime.thorpe@dolanaccountancy.com.