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Christmas company parties – cause for cheer

Newsletter issue – December 2024

With Christmas soon arriving, you may be planning a festive party for your employees or on behalf of the company you work for.

It sometimes surprises people to hear that your business can benefit from a tax-free allowance for throwing a yuletide bash.

You can spend up to £150 each year per employee for holding a Christmas party and you do not have to pay tax or national insurance on this.

The party must be open to all employees. For those of you with a business operating at multiple sites, HMRC has this to say: "If your business has more than one location, an annual event that's open to all of your staff based at one location still counts as exempt. You can also put on separate parties for different departments, as long as all of your employees can attend one of them."

And the other good news is that it could even be an online party, rather than in-person.

It's also worth noting that it's not just a Christmas social function that attracts this tax benefit. A party at another time of year could also count. A summer barbecue is another example specifically mentioned by HMRC. You could host a new year party, for example. The requirements state it has to be considered an 'annual event' to qualify.

It's also worth noting the position regarding salary sacrifice arrangements. It's not necessary to report how much parties are worth to each employee if they are a part of such a scheme.