by Alan Wight and Joanne Madeley

In the UK, employers are limited in the amount of money they are allowed to spend entertaining their staff. HM Revenue & Customs set the limit at £150 including VAT per person for annual parties open to all employees (like a Christmas party or Summer BBQ). If you hold more than one event and the total value exceeds £150 then there are strict rules that the employee is liable to pay the full tax and NI contribution (and the employer also has to pay employers NI too).

Crucially, the £150 cannot be a contribution to a more expensive event and the company pay the difference - the total cost of the event has to be less than £150 per person.

Read more on the HMRC website: http://www.hmrc.gov.uk/payerti/exb/a-z/s/social-functions.htm

However Business Visits and Events Partnership (BVEP) have recently bid to double the tax exemption for staff parties which would set the limit at £300 making a huge difference to a number of businesses.

Some business events could fall foul of this law if there is not a clear business purpose - talk to the Cascade team if you are in doubt, we have good experience in this area.

It's also worth bearing in mind that prizes, awards or incentives are also considered to be Benefits-in-Kind by HMRC and are also liable to tax.