Can annual parties be provided to employees tax free?

Answered by: Katie Williams, of Hazlewoods LLP

An annual event such as a Christmas party, is an allowable expense for the employer and is a tax-free benefit for the employee providing:

-the total cost is no more than £150 per head. This amount is inclusive of VAT and also includes and transport or accommodation cost; and

-the party is open to all staff members (or all staff in a particular location). The £150 limit per head is for all attendees, therefore, if partners of employees are also invited then this limit does not need to be divided.

There is no limit to the number of annual events that you can hold and provided the total cost of all events is no more than £150 per head, per annum, no taxable benefit will arise.

Where there are several annual events each year, it is possible to decide which ones to take into account to make best use of the £150 exemption. If some events are less than £50 per head, you could consider whether any of those qualify under the trivial benefit exemption.


If you have a spring ball costing £100 per head, a summer barbeque and disco costing £70 per head and a Christmas party costing £75 per head, you can nominate the summer barbeque and disco and Christmas party (total cost £145) to be covered by the exemption (assuming the usual conditions are met).

If you are looking to revamp the remuneration package offered to your employees, we would recommend that professional advice is sought beforehand to confirm the tax implications of the various benefits offered for both the employer and the employee.

For more information contact Katie Williams on 01242 237661 or visit