Whether you are a one-person limited company or employ hundreds of staff, you are entitled to provide an annual event for yourself and any staff you employ, and reclaim the costs against the company, saving corporation tax. Your company may also be able to claim the input tax if it is VAT registered and use the standard rate VAT scheme (apportionment applies where non-staff are invited, such as spouses).

The cost per head can include accommodation, transport, food and drink – but must not exceed the £150 threshold per head, not even by a penny. So, if the cost per head works out at £151, then £151 is taxable as a benefit-in-kind and has to be declared on P11d. Cost per head is worked out by dividing the total cost of the party by the number of attendees, including non-staff. Therefore, if you are a one-person company and invite your partner, you can spend £300 tax-free.

The party must also be open to all company employees to attend. Not all employees have to attend, but they must be entitled to attend.

Another point to consider is that you do have to hold an event in order to reclaim the costs against your company. You can’t simply make a cash claim for £150.

This exemption does not apply to sole traders, clients, suppliers, subcontractors, partners of a partnership. The exemption is only available for limited companies.

Contact us if you have any questions.
Sheena Kaur
Accountant & Tax Adviser