It’s Tuesday! Let’s talk Tax.
Read this week’s short Tax snippet for doctors & dentists, to help you save money and get more organised with your tax affairs. It’s just to give you a flavour – take 5 minutes with your coffee to have a read.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. The Financial Conduct Authority does not regulate tax advice.
Claim tax relief on your staff entertainment
If you have a dental or medical practice with employees, it may well be that you have an end of year Christmas party coming up this week; an opportunity to get-together to celebrate the festive season.
There are a few things to note though when organising the event, to ensure the tax relief is valid.
(1) It must be an open invitation
All your employees must be invited to the party, to be able to claim tax relief. It can’t be an event for some but not others.
(2) There is a strict limit per head
If you want to splash out more, then of course, go ahead. However if the spend per head exceeds £150, including VAT, then you will be unable to claim tax relief on the entire cost.
It is important to understand that it isn’t just the cost above £150 that becomes void, it would be the whole amount. This is why budgeting is essential as tax and NI can quickly add up.
The £150 per head allowance covers accommodation, food, drinks and travel.
This allowance is actually an annual staff entertainment allowance, therefore it is important to factor in any other events you may have organised earlier this tax year.
There must be an actual event
A real event must take place to be able to claim the tax relief, as the £150 per head is a threshold, not an allowance as such.
If tax becomes due
A Form PSA (PAYE Settlement Form) will need to be completed if tax does become due on staff entertainment. Else, the tax liability will fall with the employee, not you as the employer.
An accountant can help you with the paperwork.
Sole directors are employees too
Technically speaking, you are an employee of your own company when you are a director. All employees are entitled to take this staff entertainment allowance, and invite their spouse or partner.
However, it is always best to seek advice on matters such as these, as the HMRC legislation changes frequently.
Specialist accountant, Michael Lansdell, can help run through the technicalities with you to see if you could legitimately claim this as a cost, or not.