A Guide to Corporate Parties and Gifts
Posted on 24th November 2021 at 10:00
It’s that time of year again when staff parties and corporate gifts suddenly appear on your to-do list. Maybe you’re lucky enough to have a team member to sort them on your behalf or perhaps you have to do everything yourself. Either way, we’re here to ensure that you receive every penny of tax relief available to you in the process.
Gifts for staff
HMRC is pretty generous, as it allows you to give presents to your staff up to the value of £50 each including VAT without having to pay tax on them. There are some limitations, such as the gift can’t be cash or a voucher that can be exchanged for cash.
Nor can the gift be in the form of a bonus, salary increase or as a reward for previous work. In a nutshell, it has to be a gift to celebrate the season, plain and simple.
So, have a think about what your staff will enjoy most. It could be a food hamper, a bottle of wine, luxury chocolates or anything else to show your appreciation. You can then claim tax relief on up to £50 per staff member, which can really add up if you have multiple employees.
Staff parties in person
If you’re planning on hosting a party for your staff and perhaps some clients, suppliers and members of your business network, you can claim tax relief on this as well.
For instance, if your celebration is taking place in a venue such as a bar, restaurant or hotel, your company can claim up to £150 per attendee as an expense. Again, there are some limitations, so make sure that all of the following criteria are met:
Not all guests have to be employees, but every employee must be invited.
You can only claim the amount you actually spend, up to a maximum of £150 per head.
All of the costs incurred need to be included when submitting the information to HMRC, including any VAT.
If you go over £150 per head, you have to pay tax on the whole amount rather than just the overspend, so we highly recommend that you remain within the threshold.
Virtual staff parties
The coronavirus pandemic keeps throwing us unwelcome surprises, which means that some businesses are choosing to hold their staff parties online. A shindig through video conferencing software isn’t quite the same as meeting in person, but it’s a safe way to celebrate together without putting staff at risk. Whilst a few drinks and a chat via Zoom or Teams is great fun, there are other formats that your virtual staff party could take. For example, it could be worth searching online for bands, comedians, theatre companies and other entertainers who are offering virtual packages.
Though you won’t all be meeting in a pub or restaurant, you can still claim up to £150 per head in company expenses if you pay for the food and drink. Last year we saw multiple businesses purchase party packs and have them delivered to their employees’ homes, all of which were eligible for tax relief if they remained within the limit of £150 per person.
In order to claim this type of tax relief, you simply need to prove how many people attended (such as through a screenshot and a guest list) and purchase the food and drink through your business, rather than allowing staff to buy it themselves and reclaim the costs.
Tax management for SMEs
We’re not just accountants, as we also support SMEs and start-ups across the UK through exceptional tax management services. To find out more about how we can help you to run a more sustainable business, call our Yorkshire office on 01482 235575, our London office on 0207 885 0605, or fill in the contact form below.
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