CKLG BLOG

Your staff summer party in your accounts is tax deductible

23.06.2022

Business

Planning a staff party this summer? 

Normally, business entertainment is not a tax-deductible expense. However, the cost of entertaining your employees (including directors), for example by having a staff party, is an exception. 

Whether your business is run as a company or an unincorporated business (such as a sole trader or a partnership), the cost of such an event in your accounts is tax-deductible – great news!  

Also, by concession, HMRC allows unincorporated businesses a tax deduction for entertainment costs relating to the business’s owners where they are part of a larger cost relating to staff entertainment. For example, if the partners of a firm attend an entertainment event put on for their employees. 

What about the position for your employees?  

If you provide employees with a perk – such as a staff party - it’s a taxable benefit.  But as you’re probably aware, an exemption applies. The main conditions of the exemption are that: 

• the party or similar is an “annual” event 

• all employees are invited (but separate events can be held for different departments on different occasions) 

• the average costs (including transportation and other related expenses) of the event (events if there’s more than one in a tax year), per head for all employees and guests attending does not exceed £150 including VAT. 

So go on, you know it makes sense – enjoy the glorious sunshine while it lasts!