It is that time of the year again, but not like other years.
Christmas is not the same this year. Every year there are big celebrations and the whole country is upbeat during this festive period however this year, the UK is in a sombre mood.
The biggest culprit being Coronavirus but let us not forget Brexit too. There is a lot of uncertainties and the ban on gatherings (rightly so) has painted a glum picture during Christmas Celebrations.
However, there has been one gift granted by HMRC. No, it is not extra taxes nor is it April fools. HMRC have confirmed that Virtual Christmas party costs can be deducted from your Taxes. Please see below for further information.
Usually, entertainment costs are usually disallowed for Tax Purposes. An exception being that limited companies can host an annual party (or two) including Christmas party/dinner. These expenses can be deduced for your Corporation Tax.
The following rules apply:
For more information, please click here.
2020 has been full of challenges and hosting a Christmas Party is near impossible. However, virtual parties have become the new norm. Many of you have decided to host your own Virtual Christmas Party.
HMRC have confirmed they will allow the £150 exemption to Virtual Parties given the rules above are met.
The challenges concerning these are:
It would be ideal to document the Christmas party if you plan on hosting one and claim it as an expense when filing your Corporation Tax.
Our suggestions to tackle these challenges would be:
These are OUR suggestions and not HMRC’s guidelines. Please click here for HMRC guidelines.
If you are not planning on throwing a virtual Christmas party, you can still give something little to your team. Please considering using the Trivial benefits options.
There are a few conditions, this can be deducted as an expense for Corporation Tax purposes. There are no tax impacts on the employees such as Benefit in Kind).
If the benefit is provided to a director of a close company (or a member of their family or household) the benefit is limited to £300 per tax year.
Please click below for further information: