Work Christmas Parties can be Tax-free, says ICAEW

Work Christmas Parties can be Tax-free, says ICAEW

21st November 2010

Work Christmas Parties can be Tax-free, says ICAEWSmall firms concerned about the cost of staff Christmas parties should remember they can spend up to £150 per employee tax free, the Institute of Chartered Accountants in England and Wales (ICAEW) has said.

The accountancy body pointed out that employers can spend up to £150 annually per staff member on work parties or similar functions without paying any tax. ICAEW head of tax, Frank Haskew, said that the tax exemption would be high enough for most businesses, as most employers would be putting on a low-cost event.

“It has been a tough time for many businesses as the economy begins to recover and staff are probably in need of having their spirits raised. Having a Christmas party is a real morale-booster and rewards the hard work that staff put in over the year.”

Employers can use the tax exemption to splash out on food, drink, accommodation and transport home, but cannot use it to buy gifts or to give Christmas bonuses.

The tax-free limit applies for a tax year, so if the employer has already put on a summer party, they must be careful to ensure the amount spent per employee for the two parties in total does not exceed the £150 limit.

For more information on work parties and tax benefits, read Particular benefits: annual parties and other social functions at the the HM Revenue & Customs website.

Work Christmas Parties can be Tax-free, says ICAEW

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