Following on from our last Muras Matters, virtual Christmas parties have become a hot topic this week. Last year HM Revenue & Customs (HMRC) confirmed that virtual events can still qualify for the usual tax-free treatment available to in-person events, provided certain conditions are met.
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 tax liability for their employees or their business.
In order for a staff social event to qualify for exemption it must satisfy the following conditions:
- The event must be held annually, e.g. a Christmas or summer party;
- It must be open to all employees generally – or all staff at a location, if the employer has more than one location;
- The total cost of the event including VAT, travel and accommodation is no more than £150 per head.
If the employer holds more than one annual event in a tax year then the combined cost per head must be under £150 in order for all the events to qualify as tax-free.
HMRC have confirmed that these existing rules also apply to ‘virtual’ parties such as quizzes, food tastings, cooking lessons or ‘live’ entertainment, as well as ‘party boxes’ containing food, drink and other favours. Therefore, unlike some other Covid reliefs, this tax relief is not just a one-off. As such employers can choose whether to hold an online staff party, or hold one in person, without triggering an unwelcome tax bill as long as the above conditions are met
If you would like further information on tax relief for staff parties, or on any of the points raised above, please contact our Tax Director, Jenny Marks.
Our Current working arrangement – We remain ‘Open for business’
Our staff are returning to a mix of office based working and working from home. They can still be contacted in the usual way either via email or by calling the office number where reception will divert your call to the appropriate staff member.
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