UHY Ross Brooke Chartered Accountants

Lets Party!

In general terms employees and directors are assessed to tax on the cost of any social functions provided by their employer.

There is however an exemption that applies to an annual function or functions (for example, a Christmas party) provided that it is available to employees generally and the cost per head does not exceed £150.

There is no requirement that the function needs to be held at Christmas, it could for example be a summer Barbecue, or perhaps both a Christmas event and a summer event, as long as the total cost does not exceed £150 per head.

It must be remembered that the £150 is an exemption not an allowance. Therefore, if the cost of the function exceeds £150, then the full amount is chargeable to tax. It is not possible to simply deduct £150 from the cost per head.

Similarly, if there are two events that exceed £150 in aggregate then it may be that one can utilise the exemption but one cannot. For example, if the Christmas Party cost £120 per head and the Summer Barbecue £80 per head, then the exemption could apply to the Christmas Party but the £80 for the Summer Barbecue would be fully taxable on the employee.

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