Can a virtual party for staff be treated like a face to face annual event for employee taxable benefit purposes? If it can, the employer can spend up to £150 per head (including VAT) and the employee has no taxable benefit.
HMRC changed its guidance in its Employment Income Manual (para EIM21690) last year to make it clear that virtual functions for staff could qualify as annual events, if the following conditions were also met:
- The function is open to all staff generally and guests
- The event not a one-off, say for a person’s retirement
- If there are two or more annual events in the year the £150 per head cap must cover the costs of both events
A virtual event could involve sending each employee a hamper or party box, as well as paying for entertainment to be broadcast to the online attendees.
The gifts provided to staff as part of the annual event are not restricted by the usual £50 per item cap (as a trivial benefit), so can be quite lavish, as along as they are designed to be enjoyed as part of the event.
Written by the Tax Advice Network