As the festive season approaches and the office parties begin, it’s important for business owners to understand the tax implications of such festivities. It’s important to note that the costs of entertaining employees are generally allowable against the profits of the business.

Generally, as long as the total costs of employee annual functions in a tax year are less than £150 (VAT inclusive) per person, there will be no personal tax implications for the employees themselves. When looking at this threshold ensure that all costs have been accounted for, which may include not only the meal itself but also any drinks, transport and accommodation that you provide.

If the costs are above this £150 limit then speak to your company auditors. Their tax experts will be able to advise you on how best to treat them.