If the rules around social functions are followed, staff events like your end-of-year party, or your summer barbecue are tax-deductible for you, as the employer, and tax-free for your staff.
This means you can claim back some of the expenses you incur when putting on a social event for your team, while also helping to build better team bonds.
Whether your party is taking place in the office, at a local restaurant or via Zoom, you can be confident that you can recoup some of these expenses by making the relevant claim – HM Revenue & Customs (HMRC) has announced that these rules apply equally to any online staff events and remote parties.
Meeting the rules for tax-exempt staff functions
The annual function exemption means that your company can deduct costs for tax when holding an eligible annual staff social event. It also means that your employees don’t pay tax or national insurance contributions (NIC) on costs relating to these social events.
This all sounds like good news for the company bank balance, but how does the exemption actually work? And what are the specific rules that you need to know about?
The annual exemption is a great benefit for your company and staff. And it’s worth noting that if you’re a one-person company, that you could equally apply the benefit to taking your spouse out for a social event.
Talk to us about claiming expenses for your staff events
If you’re looking to run a staff function in the near future, talk to us. We can help you ascertain if your planned function meets the annual exemption requirements, and how you can claim back your party costs as a tax-exempt expense.
Get in touch, if you want to discuss this further, or if you want to arrange to cover any tax and NI for your employees through a PAYE settlement agreement.