News & Important Dates

2020 A year of Virtual gatherings

HMRC confirm:

“Having considered the scope of section 264 ITEPA03 (annual parties exemption), we are pleased to confirm that the exemption will apply to the costs associated with virtual parties in the same way that it would for traditionally held, parties.'

Annual Function Exemption

Employers can take advantage of the annual function exemption, which means no tax or NI contributions are payable on costs relating to annual social events organised for employees.

With social distancing restrictions in place, a physical event is unlikely for all but the smallest of companies.  Therefore, an online meeting or event would qualify as a location.

There is a limit of £150 per attendee (including non-employee guests) each year. Should this limit be breached, the employer must pay tax and NI on the whole cost not just the amount over £150.

Employers planning a virtual event should consider its organisation carefully and may need to demonstrate attendance to qualify for the annual function exemption.  The alternative of providing employees with a budget for their meal, and reclaiming on expenses, may in an audit situation, prove difficult to demonstrate as being an annual event.

Trivial Benefits Rule

Another alternative may be for employers to provide staff with a gift up to the value of £50 (including VAT), without paying tax on the item.  

This gift cannot be cash (or a voucher that can be exchanged for cash) and cannot be in exchange for work or performance.

Have your cake and Eat it?

Both the above exemptions can work alongside one another.

Please remember to keep track of minor expenses too.  If a business supplies a bottle of fizz in a nice gift bag, the value of the gift bag should be included in the value of the gift when deciding whether the total value exceeds the trivial benefits limit.

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