Employment Tax

Annual parties

Produced by Tolley
  • 19 Oct 2021 23:24

The following Employment Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Annual parties
  • Introduction
  • Exemption for annual parties ― qualifying events
  • Cost per attendee of £150
  • Attendees
  • Multiple events
  • Virtual events
  • Reporting requirements

Annual parties

Introduction

Many employers provide social functions to their staff. Often this will include some sort of annual event, usually taking place in the summer or at Christmas. See also Simon’s Taxes E4.741A. HMRC guidance is at EIM21690.

The amounts incurred by the employer in respect of the social function are taxable unless there is an exemption from tax as it is considered a benefit to the employees attending.

Exemption for annual parties ― qualifying events

There is an exemption from tax and NIC in ITEPA 2003, s 264 where the employer provides employees with a social function and a number of conditions are met:

  1. the function is an annual party

  2. the event is available to all employees in the business, or all employees at one location where the employer has multiple locations

  3. the cost per attendee does not exceed a set amount ― currently £150

Although the legislation includes the term ‘annual’, HMRC has not to date expected the employer to hold the same event every year. However, the event should be of an annual nature such as a Christmas party or summer barbecue. Events which, by their nature, are one-off events will not be covered by this exemption. For example, if an employer is having a celebration because it has been in business for 50 years, this would not be classified as annual for the purposes of these provisions.

For the treatment of social events which are not annual parties, see the Entertainment ― staff g

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