Last year many businesses put on a “virtual” Christmas party event and HMRC agreed that would be acceptable in order for there to be no taxable benefit for the employees involved.
There continues to be no taxable benefit for employees provided that all staff members are invited, and the cost does not exceed £150 per head, inclusive of VAT.
If you have also had an annual summer event then provided the combined cost of the two events is no more than £150 per head then there would be no taxable benefit in kind. If, however, the summer event costs £80 per head and the Christmas party £100 per head, only one event would qualify for the exemption.
CHRISTMAS GIFTS OF UP TO £50 PER EMPLOYEE IS ALSO TAX FREE
Remember that certain gifts to staff at Christmas are also tax-free if structured correctly. Employers are allowed to provide their directors and employees with certain “trivial” benefits in kind tax-free. This exemption applies to small gifts worth no more than £50 to staff at Christmas, on their birthday, or other occasions and includes gifts of food, wine, or store vouchers.