Virtual Christmas parties – tax free festive fun
Dec 09, 2020
Covid-19 Tax Tips
HMRC may not be the Grinch after all. They have recently announced that employers may arrange a ‘virtual’ Christmas party this year and there will be no taxable benefit for employees, provided that all staff are invited and the cost per head does not exceed the normal £150 limit.
This means that the cost of providing food, entertainment, equipment and other expenses which may be incurred in hosting a virtual event will be tax exempt, subject to the normal conditions of the exemption being met.
Don’t forget too that you are allowed more than one event a year within the £150 limit, so it should be possible to hold a proper big bash once the coronavirus pandemic is finally over.
Christmas gifts up to £50
Remember that certain gifts to staff at Christmas are also tax free if structured correctly. Employers are allowed to provide their directors and employees with certain “trivial” benefits in kind tax free.
This exemption applies to small gifts to staff at Christmas, on their birthday, or other occasions and includes gifts of food, wine, or store vouchers.
There are of course a number of conditions that need to be satisfied to qualify for the exemption:
- the cost of providing the benefit must not exceed £50
- the benefit cannot be cash or a cash voucher
- the employee cannot receive the benefit as part of any contractual obligation such as a salary sacrifice scheme
- the benefit cannot be provided in recognition of particular services performed by the employee as part of their employment duties (or in anticipation of such services)
So let’s make up for a horrible year, and start the festivities with a virtual Christmas office party instead! If you have any questions about trivial benefits in kind then please contact the team and we’ll be happy to help.