As we are getting close to Christmas, we thought we would share an update about employers’ obligations regarding social functions and parties for your employees. It’s important to note that this also applies to online or virtual parties.
The information below is applicable to any type of party or event within a year, e.g., summer party as well as Christmas.
What you need to report and pay depends on:
- if it’s an annual event
- if it’s open to all your employees
- if it costs more than £150 per head
- how many events you provide during the tax year
- whether the employee is a director, and how much they earn
The information on the gov.uk website states that you might not have to report anything to HM Revenue and Customs (HMRC) or pay tax and National Insurance. To be exempt, the party or similar social function must:
- be open to all your employees
- be annual, such as a Christmas party or summer barbecue
- cost £150 or less per person
There are a few other points to take into consideration as shown below:
- If your business has more than one location, an annual event that’s open to all your staff based at one location still counts as exempt.
- You can also put on separate parties for different departments if all of your employees can attend one of them.
- If you plan multiple annual events costing less than £150 per head combined, then you would still be exempt.
If any of the events, you provide are not exempt you will have to report the costs to HM Revenue and Customs (HMRC) and pay National Insurance for them.
You do this by reporting on each employe's form P11D and by paying Class 1A National Insurance on the full cost of the event.
We hope you find this useful, if you are still unsure whether your party or social event is exempt, please do contact us by calling 01623 490 120 or by emailing