Our experts at DSR Tax Claims know how hard it is to find good, quality information about HMRC’s tax regulations that is easy to understand, and that’s why we have created these handy guides to tell you everything you need to know. Our aim is to make life easier for our clients and that is why we want to share our expertise with you. You can also call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.
Do you need to report social functions and parties to HMRC?
If you provide or pay for any social functions or parties for your employees, you will need to report these expenses to HMRC and there may be additional tax and National Insurance to pay as a result.
What you need to report and pay depends on the following circumstances:
- Whether the party of social function is an annual event
- If it is open to all of your employees or just some of them
- If it costs more than £150 per head to provide
- How many social events you provide during a tax year
- Whether the employee attending the event is a director and how much they earn.
Are there any exemptions?
If the party or social event meets all the following conditions, HMRC will consider it exempt from reporting requirements:
- It is an annual event, such as a summer barbecue or Christmas party
- It is open to all employees
- It costs less than £150 per head to provide the event
If the party meets all of these conditions, it will be exempt and you won’t need to pay any additional tax or National Insurance as a result.
When your company has more than one work location, if you hold an annual event which is open to all of your staff members based at one location, it is still considered to be exempt. You can also hold separate parties or functions for different departments or work locations as long as all of your employees are entitled to attend one of those parties.
If you host multiple annual events (for example, a summer barbecue and a Christmas party), as long as the combined cost of those events isn’t more than £150 per head then HMRC will still consider them exempt from reporting requirements.
However, if the costs of social functions and parties form part of a salary sacrifice arrangement you still need to report these to HMRC. You would report how much they were worth to each employee, not the total cost to you.
How do you report to HMRC and pay?
If the social functions or parties you hold aren’t considered to be exempt, you need to report these expenses to HMRC and you will also be required to pay National Insurance on them. You will be required to report the expenses on each employee’s P11D form and pay Class 1A National Insurance on the entire cost of the event.
If you are reporting on multiple or more annual events which cost more than £150 per head when combined, you can exempt the costs of one event if they were less than £150. But you will need to report and pay on the full costs of any additional events which go over the £150 limit, even if they don’t cost more than £150 if taken on their own. For example, if you hold a summer barbecue open to all of your employees and the total cost, including transport and accommodation, was £10,000 for 100 employees attending (total cost per head £100). You then hold a Christmas event which cost £8000 and 100 employees also attended this event (total cost per head £80). The total cost is £180 per head, which is over the exemption threshold. Both can’t be considered to be exempt and it would be more beneficial to you if you used the exemption against the summer barbecue, which means that only the Christmas event would be classed as a chargeable event as far as HMRC were concerned.
If the cost of the events which form part of a salary sacrifice arrangement are less than the amount of salary given up, you need to report the salary amount to HMRC instead of the event costs. This only applies to salary sacrifice arrangements made after 6th April 2017.
How can DSR Tax Claims help?
We aim to make life as simple as possible for our clients and that includes giving you the information you need to make your taxes (and your life) simpler and less stressful. Our team of experts at DSR Tax Claims are always on hand to help our clients and our excellent standing with HMRC means that we can make sure you don’t fall foul of their regulations, while claiming your maximum tax relief. We can even take care of all that paperwork and deal with HMRC on your behalf too. Call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.