It’s Christmas time…are parties deductible ?
It’s Christmas time…so what is deductible ?, and what isn’t ?.
I am glad you asked !.
HMRC are not keen on people claiming food and drink as a deduction. Here are some exceptions;
– ‘Annual’ and recurring Christmas parties: you can spend up to £150 per year per employee (inclusive of VAT)
– Meeting refreshments: Drinks, biscuits and snacks at a meeting are not deemed to be entertaining so can be claimed. (To overstep the mark from “refreshments” to “entertaining”, the recipient should “feel entertained” and thus be aware that you have intended to “oil the wheels of business”.
– Travel sustenance: If you are outside your normal working routine, and you have had to make alternative arrangements for meals and drinks, then it is acceptable to claim those costs as a deduction. A good “rule of thumb” is that if you are more than 5 miles from their normal place of work for more than, say 4 hours in a day, then it is acceptable to claim lunch costs. If you are staying away overnight then it is also acceptable to claim for an evening meal plus breakfast the following day.
– If employees are given a seasonal present, such as a turkey, an ‘ordinary’ bottle of wine or a box of chocolates, as long as the cost is reasonable, HMRC won’t seek to tax it. Unfortunately, HMRC will not tell us what monetary limit it considers as ‘trivial’. But it seems that anything less than £50 a head is usually acceptable.
Note regarding the £150 for “annual” or Christmas parties: If the cost of qualifying parties goes over £150 per head then unfortunately all the costs (not just those above £150 per head) are taxable as a benefit in kind.