Tax Free Christmas Party?

Will your staff Christmas Party be tax free?  There is an annual EXEMPTION (see example at EIM21691) of £150 – note this is not an allowance.   For functions that are outside the scope of the exemption the tax is chargeable on the full amount, not just that in excess of the £150.

The cost of the function includes VAT, the cost of transport and/or overnight accommodation if these are provided to enable employees to attend.

The function must be open to all staff, divide the total cost of each function by the total number of people (including non-employees, ie spouses) who attend in order to arrive at the cost per head.

http://www.hmrc.gov.uk/manuals/eimanual/eim21690.htm

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