It’s that time of year again, mulled wine, mince pies, Christmas jumpers and parties! The 2020 festive season will be unlike any other. Traditional office parties may not be an option so it’s time to get creative! You’ll be pleased to know that the Taxman is not immune to the spirit of Christmas. Maybe he isn’t a Grinch after all? HMRC have confirmed that the annual parties exemption will apply to the costs associated with virtual parties in the same way that it would for traditionally held parties. They even included an example:
“A company holds one annual function in a tax year and does so 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.”
A few ideas for a virtual Christmas party might include:
- Virtual Christmas dinner – why not send a hamper of food and drinks to your team. Throw on your Christmas jumper and hop on zoom while you all enjoy
- A virtual cocktail making party – send all the ingredients to your participants and have a go at making some cocktails on a video call
- Christmas Quiz – it might sound a bit cliché but who doesn’t love a good quiz?
- Virtual Escape Room – there are lots of them out there and could be something a bit different for your team
- Wine tasting workshop – again there are several companies out there that will be more than happy to provide everything your team need for a night of wine tasting and relaxing after work
- Fancy dress video call – everyone get together on zoom with prizes for the best dressed!
A few “Grinch” points to note:
- keep a proper record of all the costs to ensure the exemption limits are not exceeded
- All employees must be invited
- You will need to keep a register of those who attended
It may be tempting to tell all employees just order a takeaway and submit it as an expense. However, this may prove more difficult to demonstrate as being an annual event as opposed to a series of unrelated events.
Are you all zoomed out? You may choose to show your appreciation for your staff with a gift. HMRC does not tax seasonal gifts to staff, such as a turkey, an ‘ordinary’ bottle of wine or a box of chocolates, so long as the cost is less than £50 a head (a trivial benefit). Gifts worth more than this, such as an expensive hamper or a case of wine, may have to be reported on the employee’s P11D, or included in a PSA. Don’t forget a gift of cash would be taxable as earnings in the normal way.
As always, if you have questions or need some advice please get in contact.