That teambuilding improves performance, motivation and staff retention is becoming increasingly well known in the business community but did you know these activities are tax deductible too? There is a slight grey area around whether activities like escape rooms for teambuilding constitute training or staff socialising but both these categories have allowances when it comes to tax but have different things you need to be aware of.
Is Teambuilding Training?
HMRC defines training thus: something that can “impart, instil or improve or reinforce any knowledge or skills likely to prove useful when performing duties of any relevant employment”. The grey area occurs when you engage in a teambuilding activity that isn’t directly related to your work but could be said to have improved teamwork in general. For some activities, you may need to explain why they were necessary to improve how your team work together and why this is important in their work.
Tax Allowance on Training
All staff training is a tax deductible expense and companies can claim back VAT. The only way training can get complicated in terms of tax is if any part of is seen as a benefit in kind to employees or directors in which case it incurs tax for those people. For example, if you had a training day where a company paid for staff to spend half the day in a spa, that would be seen as a taxable benefit but, if you had a training event in a hotel which happened to have a spa that employees could use, that wouldn’t be seen as such. Yes, it’s pretty confusing so it’s best to talk to your accountant if you’re unsure.
But Socials Have an Allowance Too
The good news is that even if you are just taking your staff out for a jolly, there is a certain amount you can do without needing to pay National Insurance on it or getting into a taxation pickle. HMRC allows for ‘annual’ staff socials where companies pay no more than £150 including VAT per employee and invite all their employees without incurring any extra tax for those employees or any extra National Insurance. These expenses are also tax deducible. If it’s purely a staff event, companies can claim back the VAT too. ‘Annual event’ sounds a bit stingy as if you can only hold one a year. However, you can actually hold a few of these a year such a Christmas party and a summer barbeque etc. provided they don’t add up to more than £150 per employee in total.
Clearly, we’re an escape room, not an accountancy practice so please speak to your accountant if you need clarification on how all this works. We would like to point out though that escape rooms like ours are designed specifically to make people work together so are ideal for teambuilding as well as a bit of fun. Businesses regularly come to us as part of team bonding days or as a great start to a staff night out. If you’d like to know more about what we can offer, please get in touch on 01273 220388 or email email@example.com.