HMRC clarifies treatment of virtual Christmas parties
20 November 2020: HMRC confirms that annual party exemption applies to virtual festivities, including gifts consumed at the party.
In the Insights story explaining how the staff party exemption might apply this festive season, the Tax Faculty highlighted factors to consider when planning virtual parties.
ICAEW is pleased to report the taxman is not a grinch at all and is ready to spread some virtual cheer.
HMRC will soon update its guidance, but has confirmed that virtual parties for employees are exempt from tax where the cost does not exceed £150 per head.
“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. ”
So start planning those virtual gatherings now, and have a very festive time.