Due to the coronavirus restrictions, you may be unable to host your usual Christmas Party for your employees.
We are pleased to confirm that the annual parties’ exemption (s264 ITEPA03) will apply to the costs associated with virtual parties in the same way that it would for traditionally held parties.
Therefore, subject to the normal conditions of the exemption being met, the expenses of hosting a virtual event, including providing entertainment, equipment and refreshments principally for enjoyment or consumption by your employees during the event, will be exempt.
For annual parties or similar annual events, no liability to income tax arises provided the cost of the annual event does not exceed £150 per head, and that the event is available to employees generally.
Please note that the exemption is not limited to Christmas parties, therefore it will still apply if you decide to postpone your party or function, as long as the function takes place within the current tax year and is within the £150 limit.
Further information on the annual party exemption including examples can be found at EIM21690 and EIM21691.