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As long as you avoid the office photocopier after a few too many glasses of Egg Nog, work Christmas parties can be wonderful things. Especially when HMRC is being uncharacteristically generous and helping with the cost.Yes, you did read that right – HMRC will chip in to the cost of your festive night out.
As seasoned contractors almost certainly already know – but any newcomers may not – the normally Scrooge-like tax office provides a certain amount of tax relief for holding a company Christmas party (it doesn’t have to be a Christmas party, in fact, but more of that later).
The way it works is this. Providing certain conditions are met, you are entitled to provide an annual event for yourself, any staff you employ, and your partner, and reclaim the costs against the company, as long as the cost per head does not exceed £150.
That cost per head doesn’t have to be just for a meal or a few drinks – it could also include transport and accommodation too.
The conditions are fairly straightforward: Make sure you actually have an event (you can’t just make a £150 cash claim), make sure all company staff are invited (in most contractors’ case, that will just be you) and don’t exceed the £150 threshold, not even by a penny. HMRC rules are that to arrive at the cost per head you should “divide the total cost of each function by the total number of people (including non-employees) who attend”.
As we said earlier, if you don’t want a Christmas party but don’t want to miss out on some unexpected HMRC largesse, that’s fine too. You could have an event at a different time and still claim. You could even have a Christmas event and another one later in the year – as long as the total claim for all events doesn’t exceed the £150 per person threshold.
As ever, if you have any questions just email Jo (firstname.lastname@example.org), Ben (email@example.com) or Peter (firstname.lastname@example.org) and they’ll get back to you forthwith.
Now go out there and enjoy yourselves – and have a good Christmas!