It’s Christmas time – the season of goodwill and the excuse for a fantastic party for all the people working in the company you’re contracting for.
Not you though. Contractors should never become part of the furniture. And that means not going to your client’s Christmas party.
But never mind – it wouldn’t have been that good anyway. Tax rules mean that you can have a lot more fun and do it your way. But what can you do?
A company event is an event which is paid for by a firm to which all employees are invited.
Your company event doesn’t have to be at Christmas. And you don’t have to restrict the number of events to one a year. You could have one in Easter, one to celebrate Summer Solstice, or even one on the anniversary of the founding of your company.
As a contractor, you may be the only person at your company. This, of course, means that you don’t have to follow the whims of the board of directors of your contractor on the theme or venue.
This company event is going to be very much your show – you pick what, where, when, and with whom.
How much can you spend?
For your company events, you have an annual per head tax exemption of £150 including VAT. Be careful though because if, over the course of the year, your spending goes over £151 per head, every penny now becomes liable for tax and both forms of National Insurance.
Is the VAT reclaimable?
Yes if you have an employee and they attend.
No if you are the only employee because the expenditure is not considered as “goods or services…used for a business purpose”.
Are there any limits on what I can spend the allowance on?
You can include food, drink, travel, and hotel stays as well as any joint activities you take part in with your staff on the day – like paintballing, for example.
What about my partner?
It’s absolutely fine to take your partner along – the £150 expenditure is per person and money spent on your partner and your employees’ partners counts towards the £150.
Are there any other allowances I can claim?
You are entitled to £300 a year worth of “director treats” throughout the year. You can take this from your company with no tax or National Insurance worries as long as the gifts are not in the form of cash or vouchers.
No more than £50 can be spent on any individual director treat and there seems to be no bar on what you can spend the money on. It could be a ticket to a football match, a luxurious spa treatment, go-karting with the kids – whatever you fancy.
The money you spend on your director treats can be deducted from your profits to lower your corporation tax.
Contact Smart Team for more information
Many directors, once they know about the contents of this article, express real surprise about the benefits they can take from your company with no tax and National Insurance repercussions. It includes everything from mobile phones to medical expenses, childcare to mobile phones.
To make sure you’re getting all you’re entitled to, please call us on 01202 577 500 or email us on firstname.lastname@example.org.