Tax Tip Tuesday: Annual function tax exemption

Don’t let a surprise tax bill ruin the Christmas party!

Annual function tax exemption - Tax Tip Tuesday from Consilium Chartered Accountants.

Often (incorrectly) known as the “Christmas party exemption”, the annual function tax exemption can bring festive cheer. To be exempt from Income tax and NIC, the party or function must be:

open to all employees
annual, and
cost less than £150 per attendee (inclusive of VAT).

The Annual function tax exemption can cover multiple events if the combined cost of the events is no more than £150 per head. The exemption is a threshold, not an allowance. If the Annual function tax exemption is breached the whole cost of the function is subject to tax, not just the excess. An employer may choose to settle any tax due on behalf of the employees using a PAYE Settlement Agreement.

To find out if your business complies with the Annual function tax exemption, contact our Tax team or learn more about the Tax services Consilium provides to business owners and entrepreneurs.

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