Barry’s Organising the Summer Staff Social… and He’s About to Make a £150 Mistake
Summer staff socials are a great way to bring the team together, reward employees and create a few good memories outside the office. But before Barry starts booking venues, ordering food and planning the Christmas party at the same time, there is one important HMRC rule he needs to understand.
“We’ve Got £150 for the Summer Party… and Another £150 for Christmas!”
Nice idea, Barry.
Unfortunately, that is not how the staff entertaining exemption works.
HMRC’s annual function exemption can cover qualifying annual staff events costing up to:
£150 per rule.
HMRC’s annual function exemption can cover up to:
£150 per person, per tax year
for qualifying annual staff events.
That’s one annual exemption – not £150 for every event.
One Annual Exemption Across Multiple Events
If Barry books:
🌞 A Summer Staff Social
🎄 A Christmas Party
🎉 An Annual Awards Night
they can all count towards the same £150 per person annual exemption. It’s one annual pot, not one allowance for each event.
Barry’s Budget
🍔 Summer Staff Social – £70 per person
🎄 Christmas Party – £75 per person
Total: £145 per person
So far… Barry’s still within HMRC’s annual exemption.
Then Barry Adds One More Event…
Barry decides to organise: 🎳 Team Bowling – £25 per person
His annual total is now: £170 per person
Barry has now gone over the limit. That doesn’t automatically mean every event becomes taxable…but not all three events can now qualify for the exemption. Planning ahead can help you make the best use of HMRC’s exemption.
A Few Things Barry Should Know
When planning staff entertaining, remember:
✅ Events should be open to all employees (or all employees at one location).
✅ The £150 includes all costs, including VAT, food, drinks, venue hire, entertainment and transport.
✅ The cost is worked out by dividing the total event cost by everyone attending, including guests.
✅ If an event doesn’t qualify for the exemption, it may need to be reported to HMRC.
Summer staff socials are for making memories. Not creating tax problems.
With a little planning, you can make the most of HMRC’s annual function exemption while keeping your celebrations tax-efficient.
If you’re planning a staff event, speak to Jupps Accountants first. We’ll help you understand the rules and make the most of the available exemption.