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ATT calls for seasonal party guidance

25th November 2020

The Association of Taxation Technicians (ATT) is calling for guidance from HMRC in regards to virtual office Christmas parties.

The ATT is asking for clarification on whether virtual parties, especially those that include a ‘party box’, will be eligible for the usual tax exemption that applies for annual seasonal parties.

To qualify, the party must be an annual event, such as a Christmas or summer party, which is open to all staff generally or all staff at a location.

Current rules allow employers to spend up to £150 per head, including VAT, towards the costs of an annual function without creating a tax liability for their employees and themselves, provided that certain conditions are met.

The ATT warned that with employers hurriedly considering alternative ways to express seasonal greetings and boost morale, the risk is that online events could create “unintended tax consequences”.

Jeremy Coker, president of the ATT, said:

“It is a pity that HMRC is still on mute about ‘virtual’ Christmas parties.

“There have been suggestions that a ‘virtual party’ is not really a party for tax purposes – even though so many other activities such as conferences and training have been moved online.

“We are also concerned that HMRC will seek to split out the cost of any food, drink or party favours sent to employees’ homes as a party box to accompany the online event, and treat this element as a taxable benefit because some employees could opt out of the event itself.”

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