Tax Exemption Rules For Virtual Christmas Parties

Since Public Health Scotland (PHS) urged people to defer Christmas parties at this time, many are turning to online or virtual parties this year. Where all normal conditions are met, HMRC accepts a virtual Christmas party as an event that will fall within the tax exemption rules for annual functions.

Employers can spend up to £150 per head (including VAT) towards an annual function, such as a Christmas party, for the cost of providing any food, entertainment, equipment and any other related expenses which are incurred in hosting a virtual event, without creating a tax liability.

An annual event can be held at one location, or separately for different offices/departments if your business has more than one location, as long as all of your employees can attend one of them for it to count as exempt.

It must also be noted that if there are 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. You can read more on what costs to report and how to pay here.

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