Covid has brought many changes to our lives including announced changes by HMRC to the tax relief provided for staff parties.

Historically a £150 per head exemption existed for social functions and parties.

To be exempt the function must:

  • Be open to all employees.
  • Be annual, such as a Christmas party or summer barbecue.
  • The combined cost of the events is £150 or less per person

HMRC have confirmed that where an annual function is provided virtually utilising IT then the exemption will be satisfied, allowing for costs of the provision which are generally incurred for the purposes of the event itself.

For example, HMRC guidance confirms:

A company holds one annual function in a tax year and holds it 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.

The views expressed in this article are the personal views of the Author and other professionals may express different views. They may not be the views of Lambert Chapman LLP. The material in the article cannot and should not be considered as exhaustive. Professional advice should be sought in connection with any of the issues contained in the article and the implementation of any actions.

Lambert Chapman Chartered Accountants

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