It’s the most wonderful time of the year, Halloween and Bonfire Night have been ticked off the list and now we’re getting excited for Christmas and New Year’s Eve – plus all the festivities planned with friends and family.
Contractors, however, should not be attending a client’s Christmas party. Not to fret, though, if your business is a Limited Company, you can have your Christmas cake and eat it too.
What Counts As An Annual Event?
An annual event is a regular event for all company employees to attend which will be paid for by the company. All employees within the business must have equal opportunity to attend. As you’re a contractor, it’s likely you’re the only employee of your company, which means you get to pick the when and where!
You Annual event doesn’t have to be during the festive period. You could hold your Annual Event in January, November, May, whenever you like. Plus, your annual event budget doesn’t have to be used up by only one event, you could have as many as you like within the year, so long as the total spent does not exceed £150 per head. For eg: £70pp on a summer BBQ and £80pp on a Christmas dinner.
How Much Can I Spend Tax-Exempt?
You can spend up to £150 (inc VAT) per head tax-exempt. Beware, this £150 exemption is not an allowance. So if your event comes to £151 per head, you’ll be liable to pay tax and NI on the full £151. Do not go over £150 per head.
Can I Claim The VAT Back?
If you are the only employee, and so a director too, then you cannot claim the VAT back on any Annual Event expenses. This is because the ‘goods or services are not used for a business purpose’, but if you have an employee you can claim the VAT of the Annual Event expenses.
What Can I Spend the Money On?
As you’d expect, your event budget covers food and drink, but it can also include travel expenses or overnight stays where necessary. In addition, any activities you’d like to include can be covered too.
Can I Take My Partner Along?
Yes, it’s £150 per head, not £150 per company. Technically the rules allow you to invite any number of people to your Annual Event, with £150 tax exempt per person, the guidance from HMRC mentions that family and household members are allowed to attend. But beware, if you expand your guest list and the cost of the event spirals, you will be liable for tax and NI on the total event budget.
Annual Event Ideas for Contractors
Here’s the fun part, planning your Annual Event! We’ve drawn up a list of great options for our contractor clients, there’s something for everyone here.
Annual Event Activities
- Crystal Maze Experience for you and the family. With locations in Manchester and London, you can experience the fun and games of the Crystal Maze from as little as £30pp. Tag on dinner and drinks for a fabulous festive day out.
- Escape Rooms for you and the family. Take the household on a challenging treasure hunt at an Escape Room with locations across the UK. With prices from £16pp there;s plenty of room in the budget for dinner and drinks too.
Restaurants for your Annual Event
- A night out at one of the fabulous restaurants or bars at The Shard in London is a great way to celebrate. Many of the restaurants have fixed-priced options, so going over that £150 budget is a little less of a worry.
- Manchester has plenty to offer too, head out to trendy Spinningfields and dine looking out on stunning city views from Manchester House or head underground to Austrilasia. Keep an eye on the budget and perhaps even manage to squeeze in a few cocktails at the festive Apre Ski Bar.
Annual Events Abroad
- There are some great deals to be had if you can manage a mid-week excursion. With flights from as little as £40 return to many European cities, perhaps a city break is just the Annual Event you’ve been waiting for?
If in doubt, call your Warr & Co accountant to check that your Annual Event plans are going to be suitable for this tax exempt rule.
And finally, a word of warning about attending your client’s Christmas parties. Just don’t do it, attending your employer’s annual event (or any corporate event for that matter) makes you look more like an employee. And if you look more like an employee you could be caught out by IR35.
Instead of attending a business annual event try arranging to go out for drinks one evening with a few friends from the office.