A social gathering at work can be an ideal time for team members to get to know each other better but it can be expensive. That’s why it pays to know about Trivial Benefits and tax relief on the annual office party.
You can take your employees out to lunch to celebrate a special occasion and provided you meet certain criteria, the amount spent can count as a Trivial Benefit which isn’t taxable and doesn’t have to be declared. The cost per person must be £50 or less and it mustn’t be a reward for work done or a working lunch. If the cost exceeds £50 per head, then the whole event becomes taxable. You can host several lunches each year, since for employees there is no limit on the number of Trivial Benefits they receive. For directors of a ‘close’ limited company (where there are less than 5 directors who are also all shareholders) then there is a limit of £300 in Trivial Benefits in a tax year.
Whilst there is no specific allowance for hosting an office Christmas party or annual summer BBQ you may also be surprised to know that any limited company can claim tax relief on this cost. This benefit extends to a plus one for each employee and includes food, drink, travel and a hotel stay. Again, certain rules apply. The cost must be under £150 per head including VAT, with all employees being invited to the function. Please note that the £150 cost is a limit for the tax year not an allowance, so if costs exceed this the whole party is taxable. If you’d like to be certain whether your team lunches count as trivial benefits or if your Christmas party qualifies for tax relief, chat to the HB team and we can advise you.