It’s that time of year again, office Christmas party season! Love them or hate them, the office Christmas party has become a staple of the corporate calendar – and this time of year our accountants field questions left and right on what can be claimed tax-free for the annual festive knees-up.

HMRC allow an exemption from tax, National Insurance Contributions and reporting if your Christmas party (or “annual party”, to put it in the taxman’s terms):

  • Is an annual event, such as a Christmas party or summer barbecue
  • Is open to all of your employees
  • Costs no more than £150 per head

Exemption, not allowance

It’s important to note that the £150 figure cannot be applied to events over and above this cost – it’s an exemption, not an allowance. If your Christmas party costs £500 per head you cannot offset the first £150.

You can also only use the exemption once per tax year up to its maximum value. This means if you already held a Halloween party which cost £100 per head, and your Christmas party will cost £75 per head you will not be able to waive any tax or NIC’s for your Christmas party, as the combined total is over the £150 figure.

Conversely, if you are holding two parties this year costing £70 per head each, you can claim the full amount as the combined total is below £150.

You can also claim a £150 exemption for any family members who attend your party – so if it’s just yourself and your partner you can go crazy to the tune of £300 tax-free.

If you have any questions don’t hesitate to get in touch with your Account Manager – and don’t forget to have a fantastic Christmas party.

More help with business expenses

This handy PDF guide will help you understand what you’re entitled to claim in business expenses, so you won’t end up paying more tax than you have to.