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HMRC Confirms Virtual Christmas Party Exemption

With traditional office gatherings being substituted for online or virtual parties this year, the news that HMRC have confirmed that where all normal conditions are met, they will accept a virtual Christmas party as an event that will fall within the tax exemption rules for annual functions has been welcomed by many.

The rules allow employers to spend up to £150 per head (including VAT) towards the costs of an annual function such as a Christmas party, without creating a tax liability. Therefore, the cost of providing any food, entertainment, equipment and any other related expenses which are incurred in hosting a virtual event, will be exempt, subject to the normal conditions of the exemption being met.

To qualify, the party must be an annual event which is open to all staff generally, or all staff at a specific location, if the employer has more than one location. It must be noted that if an employer has more than one annual event in a tax year, the combined cost per head must be no more than £150 for all the events to be tax-free.

For help with allowable business deductions,  please email our EQ Taxperts or call your local office contact.

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