HMRC has confirmed that a virtual Christmas party will fall within the rules for the annual parties exemption in the same way that it would for traditionally held parties.


No – it’s not a joke! To be exempt from taxation the party must:

  • be open to all employees
  • be annual, such as a Christmas party or summer barbecue
  • cost £150 or less per person.

Thus the cost of providing food, entertainment, equipment and other expenses that may be incurred in hosting a virtual celebration will be exempt, subject to the normal conditions of the exemption being met.

The department added that the event, along with any associated provision, must be available to employees generally.


Separate locations and departments

If your business has more than one location, an annual event that’s open to all of your staff based at one location still counts as exempt. You can also put on separate parties for different departments, as long as all of your employees can attend one of them.

Multiple annual events costing less than £150 per head combined

As long as the combined cost of the events is no more than £150 per head, they’re still exempt.

Salary sacrifice arrangements

You do have to report how much social functions and parties are worth to each employee if they are a part of a salary sacrifice arrangement.


Season’s Greetings to you and your families. Enjoy your virtual parties!