Virtual Christmas parties will qualify for tax exemption

The Association of Taxation Technicians (ATT) has received the following statement from HMRC about virtual Christmas parties:

‘Having considered the scope of section 264 ITEPA03 (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.

‘Therefore, the cost of providing food, entertainment, equipment and other expenses which may be incurred in hosting a virtual event, will be exempt, subject to the normal conditions of the exemption being met.

‘It is important to note that the intention of the exemption is to allow for costs of provision which are generally incurred for the purposes of the event itself, and that the event, along with any associated provision, is available to employees generally. We will be updating our GOV.UK guidance shortly.’

The rules allow employers to spend up to £150 per head (including VAT) towards the costs of an annual function such as a seasonal party, without creating a tax liability.

To qualify, the party must be an annual event which is open to all staff generally, or all staff at a specific location, if the employer has more than one location. If the employer has more than one annual event in a tax year, for all the events to be tax-free the combined cost per head must be no more than £150.

Danielle Harvey ACA, of Harvey, Telford & Bates, comments on the tax exemption for virtual Christmas parties:

“We all know that everything is that little bit different this year, including the standard annual Christmas party for almost all of us. But the tax exemption on hosting virtual parties gives employers one avenue to celebrate, even remotely. At Harvey, Telford & Bates we are on hand to help assist you and ensure that you are able to continue the festivities with this financial help from HMRC.”

If you would like assistance, please call us on 01743 462604 or email us at [email protected] to schedule an appointment or speak to one of our team.

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