An end of year party can often prove to be an enjoyable way to celebrate the festive period with work colleagues. With this in mind, the Institute of Chartered Accountants in England and Wales (ICAEW) has advised businesses to ensure that their party is as tax-efficient as possible.
An annual staff party could qualify as a tax-free benefit for employees, provided certain conditions are met.
In order for a party to qualify, the total cost per head must not exceed £150 (including VAT, transport and accommodation). An event which exceeds the cost per head limit will be liable for income tax and national insurance.
In addition, the event must be held primarily for the purpose of entertaining staff, and the party must generally be open to all employees based in that location (separate departmental or divisional parties are permissible).
Commenting on tax-efficient seasonal parties, Sarah Ghaffari, Technical Manager of SME Business Tax at the ICAEW, said: ‘A Christmas party is a great way to reward staff for hard work, and as a little festive gift, HMRC allow up to £150 spend per employee, completely tax-free.
‘The Christmas tax exemption can be enjoyed by businesses of any size, so long as it’s within the £150 budget.’
30 Apr 2015
As the General Election looms closer, the Conservative party has pledged to introduce a new law guaranteeing that there will be no increase in income tax, national insurance or VAT during the course of the next Parliament.
According to the party, the legislation would be brought in within 100 days of a Conservative government assuming power.
The latest pledges on taxation from the Conservatives also include a promise not to extend VAT to new items, and a pledge to align the upper earnings limit for national insurance with the higher rate threshold for income tax.
However, opposition parties and some economists have cast doubt on the claims, with Labour describing the announcement as ‘a desperate last minute gimmick’ and maintaining that the Conservatives will raise VAT in the future.
The Institute for Fiscal Studies has warned that the Conservatives are relying too heavily on income from unspecified tax avoidance measures to tackle the deficit, and has urged all of the main political parties to stop announcing ‘piecemeal changes’ to tax policy.
16 Apr 2015
As political parties continue to put forward their pledges ahead of the forthcoming General Election, the International Monetary Fund (IMF) has warned that the next Government could face difficulties balancing the public finances, forecasting that the economy will still be in deficit in the final year of the next Parliament.
At the time of the 2015 Budget, the independent Office for Budget Responsibility (OBR) forecast a £7bn surplus for 2019/20.
However, the watchdog has warned that spending on public services and welfare will continue to exceed the amount raised through tax revenues.
According to the IMF there is likely to be a deficit of £7bn remaining in 2020, with lower than predicted growth and tax revenues, and uncertainty surrounding the outcome of the election which could impact on the rate of spending cuts.
Despite its more gloomy long-term projections, the IMF has predicted growth of 2.7% for the UK this year and 2.3% for next year.