It’s the most wonderful, spendy time of the year. Many employees expect some form of Christmas party, by way of seasonal celebration or thanks for their year’s efforts. But just how much can you afford to splurge when you run a small business? Thanks to certain tax deductions and tricks, the number is possibly higher than you originally thought.
When you’re running a small or micro-business, it’s not always crystal clear what you can and can’t claim for. Regulations for annual parties are very specific, but follow HMRC’s rules and your SME Christmas do can be tax deductible and much more affordable…
The party must be open to everyone in your workforce – you can’t have a Christmas do only for the Directors, for example (although you can separate parties by offices – for example, a ‘London office Christmas party’ and an ‘Edinburgh office Christmas party’). It’s only fitting with the spirit of Christmas, after all.
No ‘one-off’ Christmas parties
If you’re chalking your event up as a Christmas party, that means that you have to plan to throw one next Christmas, too. HMRC will only cover annual parties, so make yourself popular and promise this party will be a regular thing.
No massive blow-outs
The limit per head for annual parties is £150 – a penny over will automatically disqualify you, and this is for the whole year as well (so if you’re planning a summer bash as well, you’ll need to share out this figure over the year).
The good news is that you can include guests within this limit per head – so a party that comes in at £50 per head would allow all staff to bring a plus one (there must be more staff than guests), with some spending spare for another annual party in the year.
How can you spend this £150?
This answer is easy – however you like. As long as the above rules are adhered to (see HMRC’s website for the official word and guidelines), your shenanigans are up to you.
A fancy meal out for your small staff of five, a cocktails bonanza for inner-city colleagues, or an adventuring expedition in the wilderness? Fulfil whatever Christmas whim your heart (or workforce) desires.
Catering companies, pubs and hotels run company Christmas parties, where you can hire a table or two on the nights they are running. If you’re a small company, opting for one of these nights will provide a suitably merry atmosphere without having to put on the entertainment yourself.
Barter your wares:
For locally known companies, or friendly SMEs, it may be possible to arrange an exchange of services. For example, a publication or website could consider offering free advertising space in exchange for a table for your company at one of these group events, or a meal out at their establishment. Just make sure your services are financially comparable so that you’re not left with the short end of the stick.
See the sights:
Work in a town or city? Plan a staff trip to sight-see the Christmas lights, or take a tour of the Christmas markets. It gets everyone out of the office and feeling festive, and if you’re on a shoe string budget you can save a lot of money (although don’t be too stingy – perhaps put on mulled wine and mince pies for all at the end of your excursions.)
Break the mould:
A Christmas do doesn’t have to be a boozy affair overflowing with festive clichés. Perhaps take your team ice skating, bowling, or to the cinema – it’s easier to control a set spend and will be equally enjoyable, and unexpected.