Are ‘Virtual’ Christmas parties eligible for tax relief?

Are ‘Virtual’ Christmas parties eligible for tax relief?

The Association of Taxation Technicians (ATT) is asking HMRC to clarify whether virtual Christmas parties fall under the tax relief this year. As a result of the coronavirus pandemic, Christmas parties are set to be a little different this year as usual work functions will not be possible. ATT is calling for HMRC to urgently release guidance as concerns are growing that businesses may be hit with an unexpected tax bill.

As current rules stand, employers can claim tax relief if the total amount for each employee does not exceed £150 (including VAT) per year. Our article ‘What tax relief can your company claim at Christmas’ has further information regarding conditions of the tax relief.

According to ATT there have been suggestions that a virtual party does not classify as a party for tax purposes. There are also concerns that HMRC will classify any food, drink or party favours sent to employees’ homes, for the virtual party, as a taxable benefit because employees can opt out the event.

ATT have been pushing for HMRC to accept that a virtual party falls under the existing rules however, if HMRC decide differently there is the alternative to take advantage of the trivial benefits rules. Under the trivial benefits rules, employers can provide benefits of up to £50 per employee, as long as the benefits are not a reward for their work but are intended as a gift. If employers have already gifted their employees under the trivial benefits rules and decide to have a virtual party then the two costs will be combined. As long as the £50 limit is not exceeded then the employer will not be subject to tax.

It is understood that HMRC are reviewing the matter. Any updates will be posted on our website.


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Emily Dodds

Emily Dodds

Marketing and Business Development Officer

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