Can I claim for a Christmas Party?

(3 minutes to read)

If you want to treat your hard working staff to a Christmas party, you could claim this back as an expense, as long you follow certain rules, such as ensuring you keep it at no more than £150 per head and invite every member of staff.

With the contracting sector continuing to grow in popularity, it is no surprise to see why, when you consider the numerous benefits that come hand-in-hand with the self-employed lifestyle.

As a contractor you are able to have a lot more control over your career, as well as increased freedom and flexibility. There is the fact that you can potentially earn more than a permanent employee working in the same role and you are able to claim back expenses that are made for the running of your business, which will reduce your tax bill at the end of each year.

Not every contractor will be able to claim back the same expenses, for example, someone who works through their own limited company (as opposed to working as a sole trader or through an umbrella company) will find that this method is a lot more tax efficient, as you are able to claim back a much wider range of expenses.

For any expenses you wish to claim, you will need to keep hold of receipts for proof of these purchases, for a minimum of 6 years.

At the end of each tax year you will need to add up all of your allowable expenses and put the total amount in your accounts and on your tax return.

The most common types of contractor expenses includes:

  • Travel
  • Your company’s commercial rent, heating and lighting
  • Computers and software
  • Stationery
  • Accountancy fees
  • Advertising or marketing costs (such as a website)

Bored of looking for the hidden extra costs? Then don’t…..

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Claiming for a Christmas Party

Many limited company contractors may not be aware that a Christmas/annual party is an allowable expense, which is great news for everyone involved – and being able to treat your employees to an event such as this is brilliant for keeping morale up!

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.

As an employer providing social functions and parties for your staff, you do have certain National Insurance and reporting obligations.

What you need to report and pay will all depend on:

  • If it is an annual event
  • If it is open to all employees
  • If it costs more than £150 per head
  • How many events you provide during the tax year
  • Whether the employee is a director and how much they earn.

However, you might not have to report anything to HMRC or pay tax and National Insurance – in order to be exempt, the event must adhere to all of these rules:

  • You can only spend £150 or less per head per year
  • It is an annual event (such as a Christmas party, or even a summer BBQ)
  • Every member of staff must be invited

If you do have multiple annual events, you will need to ensure that the combined cost is no more than £150 per person and if your business has more than one location, an annual event that’s open to all of your staff based at one location still counts as exempt. You can also put on separate parties for different departments, as long as all of your employees can attend at least one of them.

If it turns out that any of the events that you do provide your staff are not exempt, then you will need to report the costs to HMRC and therefore pay National Insurance on them.

If you have any questions about what you can and can’t claim, or about making the move to Dolan Accountancy, please call 0114 795 100 or email jaime.thorpe@dolanaccountancy.com.

Why Dolan Accountancy?

Dolan Accountancy was set up by Simon J Dolan, the man behind the well-known brand SJD Accountancy. With over 25 years experience in the contracting marketing, Dolan Accountancy has the heritage, reputation and credibility you can trust. Working closely with our sister company, Contractor Umbrella, it means we can offer one low cost, fixed fee package at £95 + VAT per month. This gives you the flexibility of using both our Limited Company Accountancy Services and our award winning Umbrella Service, for one inclusive cost. We don’t believe in tiered packages or hidden extra fees, instead we aim to give you everything you need, including:

  • Free Company Formation – This is where it all begins. Once you have decided on an available name, we will form your company free of charge (if using our accountancy services) and it will be ready for you to use in as little as three hours.
  • Free use of Contractor Umbrella – With changes in Public Sector IR35 Legislation we understand that sometimes you are required to contract via an umbrella company. We will keep your limited company ticking over, while you work margin free via our sister company, Contractor Umbrella.
  • A Dedicated Accountant – Your accountant will be there for any company or personal tax advice that you require. We will never outsource work, even to internal teams.
  • Free Access to FreeAgent – The founder behind the multi award winning FreeAgent platform was one of Simon’s first clients, therefore it only seems fitting that we offer all of our clients access to FreeAgent, free of charge.
  • Free Business Banking – We have decided to waive our commission so our clients can use Tide free of charge for the first year.
  • Unlimited IR35 Status Reviews – We will review all of your contracts for IR35 purposes and provide you with our professional opinion as to its status.
  • Free Registered and Director’s Service Office Address – Sometimes you just don’t want your home address on display at Companies House. When you sign up to our accountancy services, we will offer the use of our address as an alternative.
  • Your Business and Personal Taxation Needs – This includes Company Accounts, Director’s Personal Tax Return, VAT Returns, Payroll, Corporation Tax and Dividend advice, to name just a few.
  • Same day payments- We offer same day payments as standard providing funds are received into our account by 9am, for no additional fee.

If you’d like to find out more about how Dolan Accountancy can help you and your business, please give us a call on 01442 795100 or email sophie.lewis@dolanaccountancy.com or jaime.thorpe@dolanaccountancy.com.

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