Go online for your tax-free Christmas party

For those wanting to celebrate the festive season, but finding the 'in person' functions difficult to attend or arrange, it is worth remembering that 'virtual' Christmas parties can qualify for the usual tax-free treatment available to 'real' events.

Existing rules allow employers to spend up to £150 per head (including VAT) on an annual function, or functions, such as a Christmas party without creating a tax liability for their employees and themselves – provided that certain conditions are met.

Last year, HMRC confirmed that 'virtual' parties such as quizzes, food tastings, cooking lessons or 'live' entertainment, together with 'party boxes' containing supplies of food, drink and other favours can also qualify for this useful tax exemption.

Michael Steed from the Association of Taxation Technicians (ATT) said: "Sometimes the tax system can act as a bit of a Santa Claus elf for employers.

"HMRC's confirmation last year that 'virtual' parties are within the scope of the tax relief available for in-person events was very welcome and - unlike some other Covid reliefs - this was not just a one-off for 2020. As HMRC considers that 'virtual' parties are within the scope of the existing rules, employers can choose whether to go online, or hold them in person without worrying about triggering an unwelcome tax bill.

"While we hoped to be back to normal celebrations this year, we know that concerns about the Omicron variant have affected some employers' plans. It is hopefully a small comfort to know that moving an event online does not have to cause tax issues for either the employer or their staff."