As we hurtle towards Christmas, we wanted to reflect on what the annual staff Christmas party may look like this year.
The staff Christmas party is generally an opportunity for businesses to thank employees for their hard work during the year; and for employees to socialise with colleagues. Whether it’s a few drinks down the local pub, a meal at a swanky restaurant or ten-pin bowling, HMRC is happy that employers provide such events with no tax implications, as long as:
- All employees are invited
- The event is annual, such as a Christmas ‘do’ or a summer barbecue
- The total cost per head is less than £150
You can even have multiple events during the year – as long as the total cost per head for all the events together is less than £150 per head. If the total cost for all the events is over £150 per head, you will need to choose which event you are claiming for and which you are not.
HMRC has not changed their approach to work social events for 2020, even though it may be more difficult to have a Christmas party this year. So here are a few thoughts on how you can still hold your Christmas party and meet HMRC’s rules:
- Carry on regardless. If you haven’t already booked your pre-Christmas party – you could book it now! Like many sectors, the hospitality sector has taken a bit of a battering this year, so you could show your support – and have faith that any restrictions won’t affect your ability to host a pre-Christmas party.
- Hold your Christmas party prior to the end of the tax year – 5th April 2021, ie hold the party in January – March 2021, when hopefully there will be less restrictions in terms of COVID-19
- Hold your event online – DIY. As we have all become used to Zooming, FaceTiming and using Teams for work and socially, you could hold your event online. For example – you could provide your team members with an allowance to purchase their own bottle of wine and a take-away; and for them to join a Zoom quiz or karaoke. A note of caution here though – the event element of this is essential to ensuring that it falls within the Social Event tax exemption of £150 per head. If there is no event, just food and drink, HMRC may see this as a Trivial Benefit which is set at a maximum of only £50 per head.
- Engage a company to run your event online. There are a number of businesses who organise online events, such as gin-tasting and escape rooms.
Whatever you decide to do to celebrate Christmas, we hope you have fun, and remain safe.