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Tis the season to be merry …even if virtual……Tax-free virtual parties cleared by HMRC

The office Christmas party is always a bit of a headache for employers, with all the usual warnings being sent out prior to the party. This year will be a lot different, and believe it or not HMRC are helping out!!


HMRC normal rules permits an exemption of up to £150 per head for the cost of staff events every tax year. A lot of businesses do use this against the Christmas party, though the exemption can be used for any annual staff functions. As long as the costs do not exceed £150 per head on average and the event is open to all employees, e.g. not just for senior staff, there is no taxable benefit for the attending employees. If the cost exceeds £150, it is all taxable, not just the excess.

So in the spirit of Christmas, HMRC confirmed that virtual parties fall within the scope of the exemption. So the annual Christmas party can be online this year, and employers will be able to provide food and drink to employees and take advantage of the £150 per head tax break, as long as other conditions are met.

HMRC’s spokesperson said “Having considered the scope of section 264 of ITEPA 2003 (annual parties exemption), we are pleased to confirm that the exemption will apply to the costs associated with virtual parties in the same way that it would for traditionally held, parties.”

So everyone can enjoy a little festive cheer with their colleagues ,even if remotely. A little bit of caution is needed too, maybe good to restrict it to an hour!!

If you need any employment advice please contact our employment team or Julie directly at Julie.leonard@edwardsandcompany.co.uk



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