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Virtual Christmas parties eligible for £150 annual function exemption
15/12/2020
HM Revenue & Customs (HMRC) has confirmed that virtual Christmas parties will be eligible for the £150 annual function exemption that employers often put towards in-person festivities at this time of year.
Typically, employers can make use of the exemption for a Christmas party, as long as it is open to all employees, or all employees in a particular location and costs less than £150 per head.
The £150 exemption can cover entertainment, food and drink, transport and accommodation and VAT, as well as some other costs.
The amount applies to everyone attending, whether or not they are an employee, and is based on the average per person and not the actual amount spent on each person.
Because this is an exemption and not an allowance, the whole amount will come taxable if an employer spends more than £150 per head and not just the amount above £150.
In recognition of the substantial obstacles to holding an in-person function this Christmas, HMRC has now updated its manuals to confirm that the exemption can be put towards virtual events, such as where a hamper is provided to enjoy during the event.
