With the government advising people to reduce their socialising in the run-up to Christmas, firms are being reminded that a ‘virtual’ party still counts as a tax-free event.
Existing rules allow employers to spend up to £150 per head (including VAT) on an annual function, or functions, such as a Christmas party without creating a tax liability for their employees and themselves – provided that certain conditions are met.
Last year, HMRC confirmed that a ‘virtual’ party can also qualify for the tax exemption, and the same goes for this year too.
These online parties can include:
- Quizzes
- Food tastings
- Cooking lessons
- ‘Live’ entertainment
- Party boxes containing supplies of food, drink and other favours.
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Email JaimeMichael Steed, Co-Chair of the ATT’s Technical Steering Group, said, “Sometimes the tax system can act as a bit of a Santa Claus elf for employers.
“HMRC’s confirmation last year that ‘virtual’ parties are within the scope of the tax relief available for in-person events was very welcome and – unlike some other Covid reliefs – this was not just a one-off for 2020. As HMRC considers that ‘virtual’ parties are within the scope of the existing rules, employers can choose whether to go online, or hold them in person without worrying about triggering an unwelcome tax bill.
“While we hoped to be back to normal celebrations this year, we know that concerns about the Omicron variant have affected some employers’ plans. It is hopefully a small comfort to know that moving an event online does not have to cause tax issues for either the employer or their staff.”
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