July and August are traditionally when many firms hold summer parties for their employees to reward hard work in the first half of the year. HMRC allows a bit of tax relief for summer parties - same as for Christmas parties - allowing you to throw a few more sausages on the BBQ safe in the knowledge you're as tax efficient as possible.

How much can I spend?

The key figure here is £150; that’s the annual amount per head you’re allowed for social functions and parties. Bear in mind, however, this is an exemption, not an allowance. Even if you spend £151 per person, you can’t claim back the first £150, and the whole thing will be taxed as normal. If you want to claim exemption, £150 is your maximum annual amount.

Who can come?

To claim the exemption your party must be open to all employees. For the majority of Crunch clients (one and two-person businesses) this won't be a problem. However, if you're a growing business you need to ensure everyone is invited.

You can also claim tax exemption for any family members who attend.

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How do I claim the exemption in Crunch?

Record the cost of the party as a Subsistence Expense in Crunch’s online accounting software and you're good to go. Don't forget to scan and upload any receipts or invoices for secure storage.

Anything else?

Explanation of the £150 Limit:

• HMRC stipulates that the party must be an "annual event", not a one-off.  It's also important to note this is an annual maximum. The total amount spent on all social functions and parties for the year cannot exceed £150 per head.
  

• If you claim £150 per head for a summer party, you cannot claim anything for a Christmas party. 
  

• However, you can split your £150 exemption over a number of events; for example £75 for a summer BBQ and £75 for a Christmas party.

Company Size and eligibility:

• There are no specific requirements based on company size. Whether your business has two employees or two hundred, you can still claim the tax exemption.

Determining Family Members

For the purposes of the tax exemption, "family members" typically include:

• Spouse or partner
• Children
• Parents
• Siblings
• Grandparents
• Grandchildren

Receipt Requirements

When uploading receipts or invoices for the party, ensure they clearly indicate:

• The date of purchase
• The vendor's name and address
• A detailed description of the items purchased (e.g., food, drinks, entertainment)
• The total cost

These documents will help to substantiate your claim for the tax exemption.

You can also check out our article, "Should employers fear the office Christmas party", for more information.