The office Christmas party is off the cards this year, but many firms are being innovative and holding virtual parties instead. Why does a recent announcement from HMRC give reason to be merry?
HMRC permits an exemption of up to £150 per head for the cost of staff events every tax year. Most businesses will 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.
‘Tis the season to be virtual.
Late on Friday HMRC confirmed that virtual parties fall within the scope of the exemption. So if you are holding your annual Christmas party online this year, you will be able to provide food and drink to your employees and take advantage of the £150 per head tax break, as long as the 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.”
What to do next
For further information on this and other topics contact Tony on 07974-418819 or email at firstname.lastname@example.org or through the contact page of the website http://www.milestone-solutions.co.uk