At this time of year attention in workplaces throughout the UK turns to the Christmas party. With the festive season almost upon us there will be at least one more “black Friday”- followed by a shamefully hungover Saturday. (and I don’t mean a member of the girl group pop combo).

So with this in mind I thought what better way to get in the festive spirit than to have a quick canter through the tax implications of the office party.

The costs of entertaining staff, unlike entertaining customers, are generally allowable against the profits of the business. But…and it’s a Kardashian sized but…

But what about the tax consequences for the employees themselves? Could the hangover from the office party linger through to the end of the tax year – and beyond? Is the party a perk – and will there be tax to pay on the tipple?

If the cost of all employee annual functions in a tax year are less than £150 per attendee (VAT inclusive) then generally there will be no tax implications for the employees themselves. But (here’s Kim again)…but in considering the limit it is vital to ensure that all the costs have been included – not only the meal itself but also any drinks, entertainment, transport and accommodation.

If there are any employers that are actually that generous – and value their employees that much – their employees might be in for an unexpected surprise. If the party breaches the £150 limit then the full cost will be taxable on the employee. Ouch.

Why not let this HMRC guidance get you right in the mood for Christmas. Mince pie anyone?