Taxing times at Christmas party

A warning to companies not to give their employees a taxing time over Christmas has come from a tax specialist.

Brian Gooch, tax manager at independent chartered accountants and specialist business advisors Hawsons, of Glossop Road, Sheffield, says if businesses spend more than £150 per head on a Christmas function, their employees will have to pay tax on the whole amount because it will be treated as a benefit in kind.

He warns that to avoid tax on the employee, the function has to be open to all staff whatever their position with the company as well as costing less than £150 per head. This limit is based on the total cost of the event, which can include the provision of transport or accommodation for the attendees, plus VAT, divided by the number of people attending, including non-employees.

Mr Gooch said: “This means that if several people fail to show up having accepted an invitation it could conceivably trigger a tax liability all round.”

The exemption, he says, is not restricted to Christmas parties and applies to any annual function of a similar nature.