The Association of Taxation Technicians (ATT) is calling for guidance from HMRC on the status of virtual office seasonal parties this year.
The ATT is asking for clarity on whether a 'virtual party' – particularly one that includes a party box – will be eligible for the usual tax exemption that applies for annual parties. Current rules allow employers to spend up to £150 per head (including VAT) towards the costs of an annual function such as a seasonal party, without creating a tax liability.
To qualify the party must be an annual event which is open to all staff generally, or all staff at a specific location, if the employer has more than one location. If the employer has more than one annual event in a tax year, for all the events to be tax-free the combined cost per head must be under £150.
The ATT has warned that with employers considering alternative ways to express seasonal greetings and boost morale, online events and so-called 'virtual parties' could create unintended tax consequences.
Jeremy Coker, President of the ATT, said: 'It is a pity that HMRC are 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.'