Virtual Christmas Parties

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HMRC have now confirmed that the costs associated with hosting a virtual Christmas party are included in the exemption for annual parties and social functions.

The Employment Income Manual has been updated to say 

Where an annual function is provided virtually using IT then the exemption is capable of being met provided all other conditions are also satisfied as the exemption applies to allow for costs of provision which are generally incurred for the purposes of the event itself.

The usual conditions for the exemption will continue to apply. These include:

  • £150 cost per head (annual limit)
  • Open to all employees
  • An annual event (Christmas, summer BBQ etc)

Example – EIM21691

A company holds one annual function in a tax year and does so virtually using IT. All employees are invited and each is provided with a hamper consisting of some food and drink to be enjoyed by the attendees during the party. The total cost per head is £100 which is within the £150 exemption and so the exemption applies.

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