Annual Staff Parties

Companies can hold an annual staff party that is not taxable on the employees, provided the aggregate cost per head is less than £150.

  • The aggregate cost should be calculated including VAT and related costs such as transport and accommodation. This is then divided by the total number of attendees, which may include family, friends, contractors or clients. Note that the total number of attendees may be more than the number of employees at the event.
  • It is important to include the whole cost of the event from start to finish, food, drink and entertainment, taxis home and overnight accommodation. 
  • The event should be open to all employees generally, or all of those at a particular location.
  • The annual event is typically a Christmas event, but does not have to be. If a company has more than one event per year, then if an event falls under the threshold it will not be taxable, but the others will be.
  • If the £150 limit is breached, the whole amount becomes taxable on the employees, not just the excess over £150.
  • If the part is taxable, the benefit must be reported on each employee’s P11D, or alternatively, the grossed up tax can be paid by the employer through a PAYE settlement agreement (PSA).

As an example, an event is attended by five employees who each bring their partner. The total cost of the event, including VAT and transport is £1,750. The aggregate cost per head is therefore £175, so the event is taxable on the employees as the £150 limit has been breached. Each employee is treated as receiving a benefit of £175.

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