With the Christmas party season upon us, this month's development updates offers tips and advice on how to make sure your plans for staff parties do not fall foul of the taxman, the increasing tax compliance burden for companies with highly mobile, global employees and achieving diversity targets at FTSE 350 companies
Under HMRC rules, businesses are allowed to spend a tax-free amount of up to £150 per member of staff each year.
The rules apply to any party or similar function, which must be open to staff generally or to workers at a particular location. The tax-free limit applies for a tax year, so an employer can put on both a summer party and a Christmas dinner as long as the total cost for both is less than £150 a head.
The £150 limit includes a whole host of items such as accommodation and transport, not only food and drink. As long as the cost per head stays under the limit, employees can bring their significant others along, and businesses will get tax relief on the total costs.
Anita Monteith, ICAEW tax faculty technical manager, said: ‘A Christmas party can be an excellent way of boosting staff morale as days get shorter and can make employees feel valued for their hard work, as well as encouraging productivity.
