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Virtual festive celebrations - exemption announced

Navin Sharma, Assistant Manager, Employment Tax
20/11/2020
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Further to our recent article on office festivities, HMRC has announced that virtual parties over the coming festive period will be covered by the £150 per attendee annual event exemption (subject to the normal conditions of the exemption being met (see below). The exemption will include the VAT inclusive cost of providing food, entertainment, equipment and other expenses which may be incurred in hosting a virtual event.

We await detailed guidance from HMRC in the coming days, however 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. This is likely to mean that any food or drink provided will need to be intended for consumption during the party, rather than a general gift. However, general gifts may meet the trivial benefits exemption.

We will provide a further update when HMRC publish their detailed guidance.

Normal conditions for the annual event exemption

To meet the annual event exemption the following will need to apply:

  • it’s an annual event (e.g. a Christmas Party)
  • it’s open to all of your employees (or all employees within a particular office)
  • it costs less than £150 per head.

The £150 limit will be reduced if there have been any other events during the tax year in which you have used the exemption (e.g. a Summer Party). If the two parties combined are greater than £150 per person, you can only choose one event to include within the exemption. Please remember that all costs must include VAT.

For further details please contact Caroline Harwood or your usual Crowe contact.

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Caroline Harwood
Caroline Harwood
Partner, Head of Share Plans and Employment Tax
London