Christmas parties less costly than firms think

According to the Association of Chartered Certified Accountants (ACCA), Businesses should not cancel their Christmas parties without working out the costs involved, as they can be cheaper than expected.

Work Xmas Party

Recent research from the Institute of Directors found that more than a quarter of businesses are cutting back on expenses this year, including paying for a Christmas party.

However, ACCA head of taxation Chas Roy–Chowdhury said businesses can reduce the cost of parties by taking advantage of tax savings. He pointed out there will be no taxable benefit in kind for employees as long as costs are kept under £150 per head.

“As long as parties are open to all staff, up to £150 can be spent on each employee that is tax deductible, with another £150 on each employee’s guest,” he said. “That should be more than enough for a good night.”

The £150 limit encompasses all the costs of the event, including entertainment, accommodation, venue, food, transport and VAT. However, employers were warned that if they exceed the £150 limit, every penny will be subject to income tax and National Insurance payments.

Roy–Chowdhury added that the recent reduction in VAT from 17.5% to 15% will also ease the cost of a staff party.

“Now that the rate of VAT has been lowered, Christmas parties should be cheaper to hold,” he said.

Chartered Institute of Personnel and Development (CIPD) employee relations adviser Ben Wilmott said:

“It is a good idea to hold a Christmas party as this is an opportunity for people to get together outside the formal work context and is a good team bonding opportunity.”

“Employees appreciate that their employer is using the party as a way to reward them for their hard work throughout the year, and will feel that their employer values them,” he added.

For more information on the benefits of rewarding your staff, read our articles on Incentive Pay, Performance Appraisals and Teambuilding.

Christmas Parties Less Costly than Firms Think

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