Christmas Parties

Christmas gifts for clients and staff by Harris & Co accountants Northampton.

 

Before indulging in mince pies and the odd drink or two, accountancy firms are being urged to remind clients of ways to make corporate present-giving more tax efficient during the Christmas season, and to be wary of making expensive slip-ups by overdoing the entertaining.

Tax rules allow a tax exemption for employee entertaining where the cost of a corporate party does not exceed £150 per head, for all attendees including clients and guests of employees (including VAT).

If a party excess does result in an overspend of the £150 limit, then the amount exceeded must be reported as a benefit on the employee"s P11D, or the employer can opt to pay the tax as a PAYE settlement agreement (PSA).

However, if a business spends as little as one penny over the £150 limit, which includes VAT, the full amount spent will become liable to income tax and National Insurance for both staff and employer alike