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HMRC clarifies tax for virtual Christmas parties

Wednesday 25th November, 2020

HMRC has confirmed that annual party exemption will apply to virtual events, including gifts consumed at the party.

It has confirmed that virtual parties for employees are exempt from tax at a cost of less than £150 per head.

According to Section 264 of ITEPA 2003 the exemption will apply to the costs associated with virtual parties, in the same way as traditionally parties.

This includes the cost of providing food, entertainment, equipment, and other expenses which may be incurred when hosting a virtual event. These costs will be exempt, subject to the normal conditions of the exemption being met.

HMRC has updated its Employment Income Manual (EIM) 21690 to reflect this news.

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