Is there an allowance?
Theoretically, there isn’t an allowance for a team party or team building event per se, although HMRC does provide limited tax relief to the cost of hosting an ‘annual event’ for your company. You must meet and satisfy certain requirements, of course, but all of these are easily achievable with a little know-how.
The relief applies to ‘annual parties’ that are made available to all staff and are set at £150 cost per head. This figure is inclusive of VAT. The figure must not exceed £150, even by pence, and if it does then all of the costs incurred (not just the above mentioned £150 per head) will become immediately taxable as what is known as a ‘benefit in kind’.
In the eyes of HMRC, the cost of your annual team building event or ‘party’ is inclusive of everything from beginning to end. This includes all costs for taxis, overnight accommodation, food and drinks; literally everything must be factored into your calculations.
Your company can hold more than one ‘annual event’ each year, but with this – the total claim for all of these events combined must not exceed the threshold. This leaves it up to you which event you decide to make a claim on. This could be your work Christmas Party, perhaps a summer event, it’s entirely up to you.
Get inspired, read: Top 40 Team Building Events in the UK
Calculate the Cost per Head
Whilst calculating your cost per head, HMRC states clearly that you should divide the total cost of each function by the total amount of people (including any non-staff) who are to attend, in order to arrive at the correct cost per head.
The threshold of £150 per head applies to each and every single person attending, including guests and plus ones.
For a fully detailed clarification of the annual event expense rules, please visit HMRC’s article.
We’re here to help
If you’d like to talk to an event specialist and plan your perfect team building event, discuss team development options or just talk to a friendly expert – please do not hesitate to contact us on 0207 1676 717 or email us on [email protected]