Businesses often get confused over the tax free amount they can spend on employees at an annual party.
Currently, £150 (including VAT) can be spent in respect of each employee at the annual party. If, however, the expenditure exceeds the £150 allowance then the whole amount becomes taxable, not just the excess over £150 and has to be reported on the business’ Forms P11D. The allowance covers all costs associated with the event, such as taxis home or accommodation costs. To be applicable the event has to be available to all staff members.