It was announced yesterday that from 4th July, England’s new ‘normal’ will begin, with pubs, hairdressers, restaurants, cinemas etc being allowed to open, but all under strict new social distancing rules.
For some companies, with staff working from home, it may be months since they last saw their employees, and with guidelines gradually relaxing, they may be starting to think about some sort of summer event to help bring their employees back together, and boost morale. So, in this blog, we look at the staff entertainment allowance, and how it can be used in these new, socially distanced summer times.
Is there a limit to how much I can spend?
HMRC will provide tax relief on up to £150 per person per year. This can also include partners of employees.
Provided you follow the rules, your limited company will receive corporation tax relief on the expense, and it will not be treated as a benefit in kind (meaning employees will not have to pay additional tax/NI).
So, what are the rules?
• The event must be open to all members of staff.
• The £150 can cover multiple events throughout the year, again, provided the total amount spent doesn’t go over £150/head. So, you could spend £50/head on a summer event for your staff, and then later in the year £100/head for a Christmas party!
• If the £150 limit is exceeded, even by 1 penny, the whole amount will become disallowable and therefore treated as a benefit in kind for your employees, meaning additional tax and NI will be due.
• The £150 is VAT inclusive and also includes any extra costs such as travel and accommodation.
• The primary cause of the event must be to entertain employees. The total cost will be disallowed for tax if it is found that entertaining customers is indeed the primary function.
As with all company expenses, receipts must be retained.
How social distancing affects this
As it stands (don’t hold us to this, we all know politicians love a U-turn!), from 4th July you can:
• Meet with one other household indoors
• Meet with 5 other people outdoors
This means that if you are a larger company (with more than 6 workers), then it is unlikely that this summer you will be able to have a company wide summer shindig. However, that’s not to stop smaller companies, or even departments in larger companies meeting up (whilst social distancing) for an outdoors picnic or BBQ. Provided social distancing is maintained, this could be a great way to bring back the bond between staff that may have been missed whilst working from home, and as above, any allowable costs incurred will help reduce your corporation tax.
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