Business owners gearing up for the World Cup next month are being reminded that they could hold a football-themed office party free of tax.
The UK's leading chartered accountancy body has noted that employers can spend up to £150 per head on corporate entertainment each year to qualify for the exemption.
This total, which should cover food, drink, transport and any accommodation, can be spent on each guest, including non-employees, without attracting income tax or national insurance.
However in their guidance, the Institute of Chartered Accountants in England and Wales also said that the benefit in kind only applies if the cost of the party is picked up by the employer.
So an employer who books and pays for food and a venue, where staff buy their own drinks, can only base the potential taxable benefit on the cost of the venue and food.
"Employers entering into the...World Cup spirit should be aware that additional items, possibly viewed as gifts for employees, might be taxable," the ICAEW said.
"Tax free activities that won’t incur penalties include a sweepstake and fantasy football competitions".
The institute said the rules apply to any annual party or similar corporate function, which must be open to staff generally, or to workers at a particular location.
May 24, 2010
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