ACCA Advanced Taxation (ATX) Practice Exam

What is the maximum amount of staff party costs that can be considered an exempt employment benefit per tax year per employee?

1. £100

2. £150

3. £200

4. £250

The correct answer is: £150

The correct answer reflects the regulatory framework surrounding employee benefits in terms of staff parties. The maximum amount allowed for staff party costs that is considered an exempt employment benefit per tax year per employee is set at £150. This exemption allows employers to provide parties or similar events that promote employee welfare without incurring a taxable benefit on the employee, thus encouraging workplace cohesion and morale. If the costs exceed this threshold, then the excess would generally be taxable as a benefit in kind. This limit applies to various events, including Christmas parties and summer outings, where all employees are invited. Understanding this maximum threshold is crucial for employers as it aids in tax planning and ensures compliance with HMRC regulations concerning employee benefits.