This is a bit of strange one for contractors and freelancers but an annual event, usually a Christmas Party, is an allowable business expense for the company as long as the following conditions are met:
Total cost must not exceed £150.00 per head, not even by a penny.
All staff must be invited
All staff may invite a partner, invited partners add an extra £150 per head allowance giving you a total of £300 to spend that is tax deductible.
Business entertaining is NOT an allowable expense. You SHOULD claim for any such entertaining in your bookkeeping spreadsheet however the cost will not be included when calculating the taxable profits of your company. It therefore does not reduce your company’s tax liability.