Virtual Christmas staff events – tax exemption status confirmed

HM Revenue and Customers have indicated the following, guidance will be updated shortly.

Having considered the scope of section 264 ITEPA 2003 (annual parties exemption), [HMRC] 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.

What’s exempt

…To be exempt, the party or similar social function must be all the following:

  • £150 or less per head
  • annual, such as a Christmas party or summer barbecue
  • open to all your employees

HMRC guidance

Social functions and parties:

Trivial benefits:

Opinion

Initially virtual events were being indicated as not meeting the required exemptions. As a consequence of the current pandemic and national and local lockdown, the likelihood of the traditionally Christmas staff event is looking less likely.

Following representation via the HMRC Employer Payment Group, the alternate virtual event option was reasoned to be an alternate option, with provision of food, drink and party decoration, virtual entertainment etc. for an online event. HMRC considered the representations and have agreed that the exemption will apply to such an event.

Employers also have the option of utilising exemptions under the trivial benefits concession.

PAYadvice.UK 21/11/2020

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