Unwrap a £150 Christmas Gift from the Tax Man

by Property118.com News Team

15:17 PM, 1st December 2011
About 7 years ago

Unwrap a £150 Christmas Gift from the Tax Man

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Unwrap a £150 Christmas Gift from the Tax Man

Every landlord can unwrap a generous £150 gift to himself courtesy of the taxman.

Buried in tax law is a little known rule that lets every business spend up to £150 per head on a party for staff – and the rule applies to landlords as well.

If HM Revenue & Customs queries the bill, point them to Section 264 of the Income Tax (Earnings and Pensions) Act 2003 which says: “where in a tax year only one annual party or similar annual function is provided for employees…no liability to income tax arises if the cost per head of the party or function does not exceed £150”

As with all tax matters, there are some do’s and don’ts to consider:

  • Make sure the bill is in the name of the business
  • The party can be booked for any time of year, tax relief is not just for Christmas
  • The bill must come to no more than £150 per head – spending just a few pence more makes the whole amount taxable
  • Partners, married or otherwise, are invited, but entertaining people from outside the business is not
  • Pay any amount over £150 out of your own pocket – or ask for separate tabs for your employees.
  • The benefit is open to sole traders, partners and companies
  • Enter the expense under sundries not entertainment in the accounts

Lucky landlords who run two businesses can run a party for each with a £150 cash limit per head per business, so any other self-employment counts.

Spouses or partners who are self-employed can also invite their landlord partners to a function as well.

Two property businesses do not count unless one is a company.

Remember to raise a toast to the kindness of the tax man as you enjoy your fine wines and dining at his expense.



Comments

20:12 PM, 1st December 2011
About 7 years ago

The legislation refers to Employers' Employees and appears specific.

There is nothing in the HMRC Manuals that supports anything else.

Can you steer me to the official and specific point of reference please?

Doreen Marr

1:23 AM, 2nd December 2011
About 7 years ago

You state the party tax relief option is available to businesses including sole traders, and that the bill must be in the name of the company/business. If you are a sole trader, is it OK/accepable to the tax man if the bill is in the name of an individual?

Mark Alexander

6:12 AM, 2nd December 2011
About 7 years ago

Hi Eric

I sought the following clarification for you ...

Section 264 Income (Earnings and Pensions) Act 2003

The reference to £75 was upgraded in a later Budget to the current £150

Regards

Steve Sims
author of ‘Understanding And Paying Less Property Tax For Dummies

Mark Alexander

6:19 AM, 2nd December 2011
About 7 years ago

Hi Doreen

I am not a tax specialist so please see my post above. Steve Sims was the source of my original article.

Regards

Mark

7:02 AM, 2nd December 2011
About 7 years ago

The text of ITEPA 2003 is fairly specific and makes no reference beyond the Employer Employee provisions. I do not think that the availability is as widespread as suggested.

0:08 AM, 7th December 2011
About 7 years ago

Sorry - but this is bad 'advice'. It cannot even be advice as you admit yourself you are not qualified to give it.

How many employees does your landlord have in order to spend a tax deductible £150 per head on?

Answer: None.

Mark Alexander

8:49 AM, 7th December 2011
About 7 years ago

Thank you for your comments Phil. You are correct in stating that Property118.com is not qualified to give tax advice and we do not purport to do so.

We have stated the source of this article very clearly, it is from Steve Sims, author of the best selling book "Understanding and Paying Less Property Tax For Dummies" and his business Yardleystar which is qualified to give tax advice and specialises in providing tax advice and accountancy services to landlords and property investors/developers.

This morning I have made a call to Steve to seek further clarification on the point that you have raised and which has also been raised on the LandlordZone forum. I raised the question "can a one man band landlord who owns one property in his own name and has no employees claim this tax relief". I hope that's the question you wanted me to ask and I certainly think you will agree it is very specific and to the point?

Steve's answer to that question was YES.

As is always the case, we recommend that you take independent tax advice from a qualified accountant or by seeking clarification in writing directly from HMRC.

The purpose of this article is to alert you to the opportunity to claim tax relief which many landlords have overlooked or do not feel is applicable to them. You have a legal right to organise your financial affairs so as to pay the correct amount of tax. There are no credits from heaven for over paying.

17:43 PM, 7th December 2011
About 7 years ago

Sorry, but the original article is not referenced and is purported as fact, none of the caveats included in the comments section were included.

With the greatest of respect, 'Steve' is not The Tax Legislation, and the Tax Legislation reads fairly clearly.

The business of making profits from the rental of landlord is an income for an individual separately reportable on said individual's tax return. The landlord is not an employee and nver will be. Re-reading your article, I quote: “where in a tax year only one annual party or similar annual function is provided for employees".

The landlord is not providing a function for employees since he has none.

I do not see how Steve's 'Yes' is a greater authority than the legislation itself.

18:41 PM, 7th December 2011
About 7 years ago

I cannot help but think that this a marketing exercise for the author of the "best selling" publication mentioned in earlier posts.

A "YES" from Steve does not do it for me and I am with Phil on this one. There are no statutory references to support the view and I cannot recall the defunct ESC from which the legislation was enacted making any such provision for individuals who were neither employers or employees.

Mark Alexander

19:02 PM, 7th December 2011
About 7 years ago

I am confident in my source, this post is not an advertisement for Steve's business.


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