HMRC understands that many businesses organise Christmas meals and or parties for staff, to reflect this they have created a threshold of costs under £150 per person attending to be fully tax deductible. The cost can include, if you wish, accommodation, transport and food and drink but cannot exceed the £150, not even by a penny! To qualify the event must be open to all company staff.
Some employers choose to split the allowance of £150 across the year and hold a couple of events, rather than just Christmas. It is important that the expenses do not exceed the £150, even if more than one event.
To check that you do not exceed the £150 threshold HMRC states that to arrive at the cost per head you should take the total cost of an event and divide by the total number of people attending, this includes non-employees.
The allowance hasn’t increased with inflation and there is no indication at present that it will – make sure you keep within the limit! If you exceed the £150 this then becomes a taxable benefit.