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With the season for office parties now upon us, it’s a good time to be reminded of potential tax implications for business owners and employees.
Ivan Walker of Peterborough Accountancy Firm, Stephenson Smart & Co explains, “The good news is that, unlike entertaining customers, the costs of entertaining employees are generally allowable against the profits of the business,”
But what about the tax consequences for the employees themselves? Is it a perk of their jobs and will they have to pay tax on a benefit?
Generally, as long as the total costs of all employee annual functions in a tax year are less than £150 per attendee, including VAT, there will be no tax implications for the employees themselves. If you are hosting an employee party, you will need to make sure you have included all the costs, which may include not only the meal itself, but also any drinks, entertainment, transport and accommodation that you provide.
So with a bit of careful budgeting and planning, employee tax on being entertained can be avoided.
For more information, or advice if your employee entertainment costs are likely to rise above £150 per employee, contact Stephenson Smart & Co on 01733 343275 or visit www.stephensonsmart.com. Further guidance is also provided on HMRC website www.hmrc.org.uk.