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Can I claim a Christmas party as a business expense?

Love them or loathe them, Christmas parties are a fantastic way of rewarding yourself and your employees for a year of hard work.

Because they aren’t total Scrooges, HMRC provides added incentives to limited companies (unfortunately, not sole traders) putting on a Christmas party for employees.

The parties will be exempt from tax and National Insurance, but there are some strict rules, including the following:

  • The party cannot cost more than £150 (including VAT) per person

  • The party must be an annual event, such as a Christmas party or summer party

  • The party must be open to all of your employees (and must consist mostly of employees)

  • Shareholders are not included in the exemption if they aren’t employees or directors

You can also claim an additional £150 per person for a plus one for each employee, providing they are a family member or partner.

Exemption, not allowance

It’s important to remember this is an exemption, not an allowance. So if your party costs £151 (or more) per person, you won’t be able to claim the first £150 as a business expense – the whole thing will be taxed as normal.

The exemption also spans the whole year, so the combined cost (per person) of all parties in a single year cannot exceed £150.

If you want to learn more about business expenses, including what you can and can’t claim, check out our free Business Expenses guide.

Crunch Chorus festive meetup

If you’re not hosting your own Christmas party (or just can’t get enough of them), we’re inviting freelancers, contractors, and small business owners to our Christmas Crunch Chorus (say that with a mouthful of mince pie) meetup in Brighton.

Share a festive drink with like-minded professionals and chat with our experts about your business resolutions for the New Year.

Our meetup will be held at BrewDog on Thursday 14th December from 6pm.

Reserve your place today!

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