• Guest
  • December 17, 2015

Claiming expenses at Christmas


By Lawbite Team

Get Quote Free Legal Help
Knowing what expenses you can and can’t claim can be confusing at the best of times, let alone around December when the party and present season kicks in. Expenses are classified as purchases that relate to your business. As a general rule, expenses have to be claimed for purchases that are “wholly and exclusively” for your company - so no jacuzzi buying unless you’re in the hot tub business. Claiming expenses lowers the amount of profits you pay tax on, whether that’s whilst completing your Self Assessment as a sole trader, or reducing the amount of Corporation Tax you pay as a limited company. During the holiday season in December you may want to treat your workforce to some festive cheer. As the director of your business, an option is to put on a Christmas party for your employees. HMRC allow for businesses to throw an annual event (some choose a summer BBQ instead of a festive shindig, or both!) and claim this back as expenses. The amount you can claim is up to £150 per head providing the occasion meets certain conditions as outlined by HMRC. The £150 can be spent on food, booze, travel or accommodation. So, if your business is a two-person band consisting of you and another director, you could take yourself out for a swanky meal and claim the costs back against your profits, therefore potentially increasing your take home pay. Sounds pretty good, right? It’s worth noting that the final amount for each head has to be £150, and no more. There isn’t an option to spend £200 per head and claim back £150 - it’s the full amount (or less) or nothing at all. If a Christmas party isn’t your business' idea of a good time, perhaps you’re in a position to gift employees instead. Gifts and perks are known as benefits in kind. If you’re giving cash as a bonus this year, you’ll need to add this to the employee’s annual salary and deduct both tax and National Insurance contributions. If you’re giving large gifts and presents to employees - a car or crate of champagne for example - the same rule applies. However, if the employee earns under £8,500 and the gift can’t be resold for cash, you don’t have to declare this to HMRC. HMRC deems smaller gifts such as a bottle of wine or a box of chocolates as ‘trivial’, as long as they are given in recognition of a particular event. These wouldn’t have to be run through payroll and be taxed. However you and your team decide to celebrate this December everyone can do with a little bit of extra cash in their back pocket come January. Why not get a head start and begin to think about actively (and legally) lowering the amount of tax you pay?   Crunch is a ground-breaking online accountancy firm for freelancers, contractors and small businesses. By combining accredited, award-winning in-house accountants with internally-developed cloud software, Crunch delivers a complete business accountancy service for a flat monthly fee. No costly extras, your own personal account manager, and maximum tax efficiency. The monthly fee is just £64.50+vat. Try the free demo here. 

In closing

Nothing in this article constitutes legal advice on which you should rely. The article is provided for general information purposes only. Professional legal advice should always be sought before taking any action relating to or relying on the content of this article. Our Platform Terms of Use apply to this article.

Related Articles

Read more of our latest blog posts, featuring all the latest legal news, analysis and opinion from our expert lawyers.

  • By Lawbite Team
  • August 23, 2018
Do You Have Enough Customers? Guest Blog Post From Dent Global

by Dent Global CEO David Priestley When was the last time you got a rush of people who all want to buy from you, and you had to turn away potential...

Startups, Guest
blog image
  • By Lawbite Team
  • February 07, 2018
Letter Before Action

Do you have a claim you want to pursue? Have you suffered loss through someone’s negligence or breach of contract? Are you owed a debt? You may wis...

Technology, Startups, In The News, Accounting, Finance, Constructions, Dispute Resolution
  • By Lawbite Team
  • January 16, 2018
Happy New Year 2018 ... from Clive Rich, CEO of LawBite

Happy New Year! Well most of your New Year's Resolutions have already bitten the dust. You've already broken your Dry January Pledge. That Gym Subs...

Startups, In The News, Intellectual Property, Lessons From The Frontline, Guest

LawBite can help you

LawBite is on a mission to provide business legal advice that is easier to access, clearer to understand and much cheaper. Our on-line legal advice platform can quickly connect you with expert business legal advice. Our friendly, highly qualified business lawyers, solicitors and mediators will give you the guidance and reassurance that comes from customised legal advice for small and medium sized business.

Whether you are bringing or defending a legal claim, outsourcing work, want a business contract review to ward off disagreements, talk to an expert trademark lawyer, resolve a contractual dispute with methods like mediation and arbitration, or getting your new company set up and on the right footing with a robust shareholder agreement and GDPR standards, we can help you succeed.

defend a claim

Get Quote

defend a claim

Essentials Plan