As you grow your limited company and take on staff, you may find yourself entertaining the idea of putting on an event for some team bonding – and as a chance to let down your hair! If that’s the case, you’ll be pleased to know that you can legally claim for the cost a party would entail – however, before you reach for the company credit card, have a read of our guide below to make sure you’re clued up on the whole picture.
What Kind of Event Must it Be?
Whereas your event doesn’t have to be a party as such – expenses can also cover the cost of tickets, taxi fares and accommodation – the event must be an annual fare, rather than something such as a launch party or celebrating a client win. The most common events in this case are Christmas and summer parties. The event must also be open to all directors and employees – or at least all the employees in a specific location or department, but as a small business it’s more likely that it’ll be your day-to-day team.
What Relief Does the Business Get?
Now for the money talk. For such an event, the business can offset the costs against corporation tax on the specific condition that the total cost per person doesn’t amount to more than £150 each. As stated above, this can cover tickets, taxi fares and hotels, as well as food, drink and venue hire.
You’ll also be glad to know that the partners or spouses of employees or clients also receive their own £150 budget, which should help to cut the cost if used strategically.
There are a Few More Conditions to Meet, However…
Firstly, the moment the individual amount exceeds £150, the cost becomes a Benefit in Kind so it’s important to keep to the expense limit. On top of this, all bills and receipts must be made out to the business, not you or any other employee or director. If you’re a sole trader, you can’t claim on an annual party where you invite friends and family – this isn’t considered to be ‘for business purposes’ as there are no clients or employees in attendance. Finally, you can claim the VAT for the event, with a few exceptions (such as VAT on the cost of invited partners).
…But There are Also More Benefits
The conditions are worth it, however, as the rules have allowed for multiple annual events over a year, as long as the total cost altogether still doesn’t pass the £150 each mark. This opens up the opportunity to split the cost between something such as a summer BBQ and a Christmas party. And it’s a great way to reward yourself and any employees for a job well done!
Need assistance sorting your expenses? Or looking for more advice on claiming back on annual events? Get in touch with Gorilla for expert help, and make your accounts work for you.
