We have previously detailed that Employers are allowed to spend up to £150 per head on an Annual Party (once a year, can be Christmas or any other time)
All costs of providing the event must be counted when calculating the ‘per head’ cost. This could include:
Entertainment
Food and drink
Transport and accommodation that enables an employee to attend
If the cost per head is exceeded then the whole amount will become taxable as a benefit on the employee.
With the prevalence of COVID 19, lockdowns and tier systems, most businesses will be hosting their Christmas event remotely this year, via one of the many online platforms such as Zoom or Teams. HMRC has now confirmed, in response to stakeholder lobbying, that where all normal conditions are met, virtual events can be included when considering the £150 per head exemption.
"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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