How to have a tax-free Christmas party

With the festive season now upon us employers are looking to reward their staff after a year of hard work while embracing the festivities. Many firms lay on a Christmas party at the end of the year. A tax exemption applies for such events for each tax year so employers can put on summer and Christmas parties and employees can enjoy some tax-free fun as long as the total cost for both is less than £150 a head. Remember that even if the costs are only a penny over the limit the full amount spent on the party becomes liable to income tax and National Insurance contributions.

So what conditions apply to ensure that everyone benefits?

Naughty or nice

To be tax-exempt the event must be open to all employees in one location....