Some good festive news to end on this month. There was some speculation that HMRC would not give the green light for UK employers to take advantage of the annual function exemption if they were holding a Christmas party virtually this year. The exemption means no tax or national insurance contributions are payable on costs relating to annual social events organised for employees.
There is a limit of £150 per attendee (including non-employee guests) each year and if this limit is breached, the employer must cover the tax and NIC for all of the costs, not just the breach. The exemption traditionally considers all end-to-end costs for the event including VAT.
On the 20th November, HMRC clarified the treatment of virtual Christmas parties and confirmed the exemption would apply to virtual festivities, including any gifts consumed at the party.
Happy Christmas party planning!