As a limited company owner, staff entertainment would usually fall under the banner of being a Benefit in Kind however, HMRC does allow a small amount of relief to hold an annual event for your business.
There is a staff entertaining limit which is £150 (including VAT) per person. All guests are taken into account (i.e. employee + guest). This is an annual amount, not just per party/event so you could choose to have the company event recurring at a different time of the year but the £150 per person must not be exceeded. Any accommodation and transport costs are to be included.
If you are the sole employee of your limited company, you would therefore be able to spend a total of £300 (including VAT) if you and your guest go out on a staff party at Christmas. If you have more than one employee, the £150 extends to each official employee and their guest. To qualify, the event must be available to all employees.
If anything over £150 per person is spent or the event is not exempt, then ALL of the amount is taxable, not just the amount over £150.
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