As an employer providing social functions and parties for your employees, here's some helpful information including an overview of what you need to report and pay on and what's exempt…
What you need to report and pay depends on:
if it’s an annual event
if it’s open to all of your 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
To be exempt, the party or similar social function must:
be open to all your employees
be annual, such as a Christmas party or summer barbecue cost £150 or less per person
This also applies to online or virtual parties.
Separate locations & departments
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 one of them.
Multiple annual events costing less than £150 per head combine
As long as the combined cost of the events is no more than £150 per head, they’re still exempt.
Multiple or more annual events costing more than £150 per head combined
If any of the events cost less than £150 per head, you may be able to count these costs as exempt. But you cannot do this if you’ve already used up the £150 exemption on another event. See an example of this here.
However, you’ll have to report and pay on the full costs of any additional events that go over this limit, even if they cost less than £150 per head on their own.
The following guide contains more detailed information:
You don’t have to pay tax on a benefit for your employee if all of the following apply:
it cost you £50 or less to provide
it isn’t cash or a cash voucher
it isn’t a reward for their work or performance
it isn’t in the terms of their contract
This is known as a ‘trivial benefit’. You don’t need to pay tax or National Insurance or let HM Revenue and Customs (HMRC) know.
You have to pay tax on any benefits that don’t meet all these criteria.
Directors of ‘close’ companies
You can receive trivial benefits worth more than £300 in a tax year if you’re the director of a ‘close’ company. This includes a member of the family or household who is employed.
If you would like to ask us any questions, please contact either Leanne Pearson or Kris Clayton on 01663 743800 or email leanne@claytoncca.co.uk or kris@claytoncca.co.uk
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