Can we still have a Christmas party?
So, with Christmas fast approaching, it is the time of the year where we would normally start to look forward to our get together with family and friends. Another thing we normally start to look forward to is our work Christmas party and/or dinners.
However, this year is unlike any other, with the pandemic and the governments restrictions of social distancing, the traditional work Christmas parties do not seem like a plausible option.
Substituting a party for a cash gift might not be as welcoming for employees as thought as the gift can come with tax charges attached. Hence some employers have started to think about an online virtual party, but would this have any tax implication for the employer and employee?
Employers are usually allowed to spend up to £150 per head including non-employee guests (with certain conditions) per annum towards the costs of annual function(s) such as a Christmas party or a summer barbeque without creating a tax liability for either the employees or the employer. However, there was some uncertainty on what would be allowed this year, especially if employers carry out virtual parties.
Well we are pleased to announce that HMRC have stepped up and proven that it is not the scrooge as some might believe it to be - they have announced their part to spread the Christmas cheer:
Having considered the scope of section 264 ITEPA03 (annual parties exemption), we are pleased to confirm that the exemption will apply to the costs associated with virtual parties in the same way that it would for traditionally held, parties.
"Therefore, the cost of providing food, entertainment, equipment and other expenses which may be incurred in hosting a virtual event, will be exempt, subject to the normal conditions of the exemption being met.
"It is important to note that the intention of the exemption is to allow for costs of provision which are generally incurred for the purposes of the event itself, and that the event, along with any associated provision, is available to employees generally. ”
HMRC will be providing further detail on this and we shall keep updating this blog as that happens.
Whilst this is welcoming news we at Locumkit do strongly advise any employers who might start planning a virtual event that they consider it carefully as you might be requested to demonstrate attendance at an virtual event for it to qualify for the exemption.
If you have any questions in regards to the any of the governments reliefs or any other accounting related queries then feel free to drop me an email and I or someone from the Locumkit team shall get back to you - [email protected]
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