Christmas party allowance

[Rooinek]

Hi everyone

Apologies if this subject has been covered elsewhere but I have a couple of queries over how the xmas party tax allowance of £150.00 works.

I incorporated a company in October which has only just started trading, it's just myself as the Director and sole employee. What I'd like to do (if possible!) is to have a weekend away somewhere and as the cost will be just under £150.00, claim this is my xmas party allowance - rather than just have an xmas party (it would be a bit of a sad works do if it's just me...!). Can I do this...? And can my claim for my partner as well as she's nothing to do with my company.

Finally is the allowance every tax or calander year? I.e: if I don't have this little weekend away before this xmas, but have one before next April, can I also have one later that in 2009 as this would be classed as a different financial year for tax purposes...? Does this make sense...?

Cheers!

Michael

[robbob]

Hi Roo

Providing the criteria are met events similar to an xmas party will within the benefit exemption, so there should be no problems with a weekend away, just ensure the company only claims for amounts actually paid (Ie the company cannot give you £150 cash to spend as you want) and the amount per head should be below the limit.
The £150 exemption is per head - so you and the employee can bring your partners along too.

I think as long as you are reasonable you can use any basis you want for the annual function. E.g. if your year end is the end of Decemeber and you had a late function one year which was pushed back to the january and had the next one in december you would be ok. However if you had functions up to the limit every 11 months this would not be ok. You will also be ok with 2 functions a year if the total remains below the threshold.

A couple of notes

Function should be available for all employees if they want to attend.
If there are only directors in the company (I.e. No employees) then the exemption is not available.
You cannot reclaim vat on the portion that relates to non employees.
If you are entertaining non employees then these costs may need to be added back on your corporation tax computation.
Always document annual function type events as such to make it clear to the revenue that this is not normal entertaining.

[Rooinek]

Robbob

Thanks for the very detailed reply... alas I am the only Director, shareholder and employee of my company so it looks like this exemption may not be open to me after all... drat

[taxattack]

To clarify a couple of points in Robbob's post:

S264 Itepa, which gives the exemption, refers to the tax year as the relevant period.

My interpretation is that the director would be allowed to benefit, as the employment income parts of Itepa (incl Pt 4) apply to office-holders (S5).

Chris