A corporate team-building event can be a powerful thing for your business and your employees. It’s a great way for your employees to connect with one another, and in the main to learn new skills, something they may not have considered before. Whether you’re organising the next corporate away day or a team-building event, have you actually thought about whether the event is a tax-deductible expense?

Whilst there isn’t an allowance as such for a corporate team building event, HRMC does provide tax relief on the cost of hosting an annual event. Although you would need to adhere to the key requirements set by them.

What is the tax relief allowance?

The tax relief allowance applies to “annual parties” that are made openly available to all staff members and total £150 per head. This figure must not be exceeded though, even by a penny as this will immediately become taxable!

What does HRMC say?

According to HRMC, the exemption applies to an annual party that is available to all employees generally, and available to employees generally at one location, where the employer has more than one location.

HRMC defines the word “annual” as something that happens once a year on a recurring basis. So, if you were to hold a one-off event then, unfortunately, this would be taxable. If you provide one function for employees, no charge to tax arises if the cost of the event does not exceed £150 per head.

In the eyes of HRMC from the beginning to the end, the cost of your annual team building event is inclusive of everything. This means that literally everything needs to be factored into your calculations – including transport, overnight accommodation, food, and beverages.

For full detailed clarification of the annual event expense rules, check out this HMRC’s article.

Staff training

Another way to claim your corporate team building event as a tax-deductible expense is to demonstrate that it constitutes ‘staff training’.

For it to be tax-deductible training expense, it has to be shown as a necessary part of your employee’s role, something that you require them to attend and closely relates to their job requirements.

Other Considerations

If you’re planning a particularly lavish event or planning to hold the event abroad, you’ll find it much harder to argue that the event was not designed to reward your staff or of a business nature.

Unfortunately, this was the case for the owner of Iceland who took 800 managers in 2013 to Disneyland Florida at the cost of £5000 per head (Lucky team they were!). As a result, they faced a hefty £2.5 million bill for the tax & NI due to the corporate event.

Want to know more?

Hopefully, now you’ll know whether your annual corporate team building event is taxable or not, so why not let us help you plan your next annual team-building event. With over 100 indoor, outdoor and evening team building events to choose from, you’ll be spoilt for choice.

Get in touch with our team today!