festive party expenses

Can you claim your festive party expenses?

By Published On: 7 December 2021

Who doesn’t enjoy a festive party, and following on from this past year we’ve all had, the team here at Aardvark believe that everyone deserves to let their hair down and have a good time.

So are you able to claim your festive party expenses, and what are the rules you have to stick to? In this blog we explore just that, to help you celebrate the end of the year in style.

Allowable business expenses

Whilst HMRC is a scrooge for most of the year, when it comes to events they can be quiet generous. So believe it or not, HMRC do class staff entertainment as an allowable business expense. But before you go planning the party to end all parties, HMRC do have some rules which you must abide by…

Rules to follow

As a director of your Limited Company you’re able to host an event up to a certain value, which is exempt from Tax and National Insurance, so long as:

  • The total cost of the event is less than £150 per person, per year
  • The event is annual
  • All employees are invited to attend
  • The £150 limit includes VAT, plus any additional costs such as accommodation and travel
  • If you’d prefer not to physically attend an event, you can host a virtual event. For example, if you were to send every employee a hamper, or box of wine up to the value of £150, this would be allowable
  • If yourself or any of your employees are part of a salary sacrifice scheme, you do need to report the amount to those employees

What if you’re the only person in your Limited Company?

So long as your planned event satisfies the above criteria, you can still party solo, free from Tax and National Insurance.

What about your employees?

There are no limits to the number of employees you can invite.

The cost of an event is an exemption, not an allowance

If you exceed the £150 limit by even a penny, the whole expense will be subject to Tax and National Insurance. Staff events are considered by HMRC as an exemption, not an allowance, so don’t be tempted to go over the £150 limit, even by a penny.

It’s really easy to calculate the cost of your event:

If it’s just for you – total up all of the associated costs

If it’s for you and your employees – add together all costs, and divide it by the total number of employees to get the cost per head

Aardvark’s final thoughts

Remember that whilst it would be lovely to have the £150 limit per event, it’s per year, so you could have multiple events, but only the £150 once.

How can your Aardvark accountant help?

Before making any bookings be sure to run your plans past your Aardvark accountant, who will be able to advise whether the event is claimable and all above board. No one likes to be out of pocket, especially at Christmas time, so always double check your plans before making them.

As an Aardvark client you have unlimited access to your accountant, with a direct line to expert advice and support. If you’re looking for an accountant that specialises in the complex needs of Limited Company contractors, look no further! Our accounting packages start from only £69 +VAT per month, and include everything you’ll need to contract confidently and compliantly. Get in touch today to find out more.

New to Contracting?

  • Complete business set-up

  • Help choosing between Limited and Umbrella

  • IR35 explained

Find out more

Switching Accountant?

  • Switching is quick and easy – we do it for you
  • Quick and responsive personal service
  • Pro-active tax reviews and advice
Find out more