The key points to note regarding ASEs and the tax treatment involved are:
- £150 per attendee can be spent by employers on ASEs as an exemption, NOT an allowance
- This is available to cover one or more ASEs during the year
- ASEs are just that—they are annual events, NOT biannual or occasional. Biannual or occasional social events will not be covered by the £150 exemption
- The £150 includes VAT and covers transport, accommodation, meals, drinks etc.
- The ASEs need to be open to ALL employees and can cover partners of employees and also subcontractors
- The cost of self-employed staff attending the ASE should be added back on the tax computation as they are not covered by the employment regulations
- The total cost of the function/s is divided by the number of attendees and then a review of the treatment is carried out
Where you are having more than one annual function and the total cost of the two or more functions is greater than £150 per attendee, one may be a benefit. However, this is where the interaction with the trivial benefits rules can come into play. Functions where there is a cost of £50 or less a head could be covered by the trivial exemption rule. For example:
- Annual Christmas function, £140 cost per attendee – covered by £150 exemption
- Annual BBQ, £40 cost per attendee – covered by the £50 trivial benefit rules
- Total cost of functions £180 per attendee – over the £150 exemption limit
Where Directors are the only employees of a business, it is important to check that all requirements are fulfilled for the exemption to apply.
Where the £150 exemption is exceeded the WHOLE cost will need to be treated as a Benefit in Kind (BIK) on your employees (Section K of form P11D) or, more commonly, a PAYE Settlement Agreement (PSA) is set up so that the you as the employer pay the tax and NICs on behalf of your employees.
Award Ceremonies
If your employees are required to attend Business Award Functions, the costs should be reviewed.
Provided they are ‘qualifying expenses’ necessary in the ‘performance of their duties of employment’, they are allowable without any further PAYE tax or NIC implications.
The costs would be treated as business expenses similar to attending a trade expo, where employees promote their business and network with other similar businesses. The cost of the tickets and associated costs would be allowable. The cost of any accompanying guests would be classed as client entertaining and would need to be added back on your tax computation.
Please note this is quite a grey area which could be challenged by HMRC, so do get in touch with us about award ceremony attendance, so we can review the individual situation for you.