Christmas Party Budgets

Don't scrimp like Scrooge - it's a false economy!

Posted on 27 September 2002

Christmas Party Budgets

Don't be taken in by the £75 tax budget red herring this Christmas...!

Crowding round the office photocopier, plastic cup of Liebfraumilch in hand is not how the annual office Christmas party should happen. It ought to be all about having some real fun and ending the working year on a high. If the corporation tax man and your finance department have their way, however, we may well see a return to the sad old days of office parties. Not only has the Inland Revenue not increased the per employee tax deductible event spend of £75 (including VAT!) at all in the past decade, but it would seem that financial controllers would happily cut the expenditure altogether.

But is this really a wise saving for the company? Beyond the themed decor & champagne bottles, there is a serious motivation for throwing these events. As Alison Smith, associate director of corporate communications at leading professional services recruitment company Badenoch & Clark says, ‘Consciously budgeting for staff morale initiatives is definitely worthwhile.’ She continues, ‘In some ways they are more important in tougher economic times when the ongoing support and investment in staff is paramount if we are to take full advantage of the economic upturn.’

Virginia Bottomley, former secretary of state for National Heritage, also recognises the economic worth of these events. Calling on the Labour government to support the meetings industry at a recent reception organised by the British Tourist Authority she said, ‘business tourism, including the meetings industry, is the job creator of the future’. A government whip responded that the ‘government recognized the vital contribution business tourism makes to the nation’s economy’.

But at the very least, the allowance needs clarifying. According to Sam Gill, Chairman of the Concerto Group (which includes Christmas party market leaders The Ultimate Experience) and also of the Corporate Events Association (CEA), it is not a given that the £75 allowance is meant for Christmas anyway. Officially, it is a total budget for any entertainment provided throughout the year – in other words, the ‘Christmas allowance’ is something of a red herring.

Gill is also quick to stress that axing the Christmas party is a false economy. The celebration that comes but once a year is ‘good for business, morale and loyalty; but it’s hardly a good “thank you” if people have to buy their own drinks’, he says. With the value of the allowance eroded by inflation, event organisers find it increasingly hard to offer good packages that stay within the £75 limit. Moreover, the allowance is not proportionally increased for small companies, making it difficult for them to afford a good bash.

With all this is mind, the International Special Events Society (ISES), and the CEA are now formulating a plan to lobby government for a clarification of the rules, and an increase in the allowance up to £100. They have SM’s full support – we look forward to celebrating the campaign’s success, in fact. And in the mean time, bully your boss for a decent budget, while he’s still got the chance to entertain you…!!!