Can We Still Claim the £150 Christmas Party Exemption If…?

‍HMRC’s annual event exemption allows staff Christmas parties to be tax free if the event is annual, open to all employees, and costs £150 or less per head including VAT, travel and accommodation. Go even £1 over and the whole amount becomes taxable.

‍

‍Can we have more than one event? Yes, but the combined cost must stay within £150 per head. If the total exceeds £150, you can choose which event to treat as exempt.

‍

‍What if we hold parties in different locations? That’s fine. As long as every employee can attend one of them, it still counts as a single annual event.

‍

‍Can we invite partners? Yes. Partners do not count towards your £150 per employee allowance. The £150 limit is based on employees only.

‍

‍What if fewer people attend than expected? The calculation is based on who was invited, not who attends.

‍

‍Do virtual parties qualify? Yes. Online events can be exempt as long as they’re annual and open to all employees. Hampers or gifts linked to the event count towards the £150 total.

‍

‍Does a hotel stay count? Yes. All related costs, including accommodation, transport and VAT, must be included in the per-head figure.

‍

‍Do directors qualify? Yes, if they’re employees. Sole traders cannot claim the exemption for themselves but can for their staff.

‍

‍What if we exceed £150? The full amount becomes a taxable benefit and must be reported on a P11D or handled through a PAYE Settlement Agreement.

‍

If you’re planning a festive event and want to make sure it qualifies for the exemption, get in contact with us and we’ll be happy to answer your questions.