Can you hold a Christmas party (or any other party for that matter!) as a single person Limited company?
You can have as many parties as you like PROVIDING the cost of the events do not add up to more than £150. This means you could have a number of big lunches, as the £150 need not be confined to one event or a single extravaganza!
Can a sole trader hold a Christmas party?
Yes and no. A sole trader cannot claim for him or herself, but can claim for any employees.
- A director of a limited company can claim on the basis that he/she is an employee of the company.
- The £150 per head is an exemption and not an allowance to be offset. In other words, use it or lose it!
- The amount of £150 is per attendee and not just for employees (i.e. partners/spouses who attend have their own exemption limit of £150)
- To arrive at the cost per attendee, add all costs (which would include such things as taxis and accommodation) of the event and divide by the number of attendees.
- For the exemption to apply, the event must be generally open to all employees – not much of a problem in a one man or husband and wife Limited company. If your business is larger then the party must be open to all employees. Although events based on separate working locations or departments of employees are allowed if generally available to all employees within the location or department. In general the party must be open to all and therefore an exclusive event for Directors only would not qualify.
- The exemption can be spread across more than one event.
- If a number of events are held by the employer and one of them takes the average cost per head above the £150, then the employer needs to decide which events are exempt (under the £150) and which events are taxable (an event which causes the cumulative average per head to exceed £150).
If you would like advice on whether your staff Christmas party (or other staff social events) qualifies for the exemption, then contact Clearways Accountants on 01737 244298 or use the contact form below.