2.10 Staff social functions (including Christmas parties)

Under the current HM Revenue & Customs rules, staff are taxable personally on their share of the expense incurred by an employer in providing a social function for employees.

There is an exemption applicable to an annual party (for example, a Christmas party), or similar annual function (for example, a summer barbecue), provided for staff and:

• available to all staff generally or
• available to all staff generally at one location/department, where the employer has more than one location/department

For such annual function, no charge to tax arises if the total cost of the event per head, including VAT, cost of transport and accommodation, does not exceed £150.  If it exceeds £150, staff are taxable personally on the full costs per head, ie not just the excess over £150.

The tax rules on this are complex and liable to changes, please consult the Tax Manager prior to arranging the function.