Contractors’ Questions: Is the Christmas party exemption £150 or £75?

Contractor’s Question: Many of ContractorUK’s articles on the annual company party tax exemption state the limit per head is £150. However, on the legislation.gov.uk website it says the limit is £75 per head. Please could you clarify which is correct; £75 or £150?

Expert’s Answer: There is, fortunately, a simple explanation for this apparent difference and it’s good news for you!  The legislation online has not yet been updated, to reflect the change in the amount from £75 to £150

On the government-related webpage linked to in your question, you will see a section at the top in a purple/pink colour, headed ‘Changes to legislation’.  If you click on ‘View outstanding changes’ and then click on ‘More’ alongside the first line ‘Changes and effects yet to be applied to:’ you will see that Statutory Instrument S.I. 2003/1361 art. 2 has amended s 264(2) and s264(3).  By clicking the ‘art. 2’ part of the link to the statutory instrument you will see the increase to £150.

The Statutory Instrument was issued in 2003 and hasn’t yet been incorporated into the legislation online. It is fairly safe to say that it never will be, until and unless some consolidating legislation is enacted.

This highlights the fact that legislation on the gov.uk website may be out of date. Some of the legislation will have seen a whole series of changes that have not been updated. This can make it difficult and tiresome to work out what the current legislation actually says, but it is important to work through the changes. Or just ask an adviser on the legislation in question.

As to the fun part of the £150 annual party exemption, such as spending it during this season of goodwill, there’s a comprehensive explanation in this ContractorUK piece. Enjoy!

The expert was Graham Jenner, director at contractor accountancy firm Jenner Accountants & Co.

Friday 1st Dec 2017