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Entertainment allowance officially includes virtual parties

Wondered if the annual party exemption would apply to your next virtual staff party? The answer is yes! HMRC have confirmed with the Institute of Chartered Accountants in England and Wales that £150 per head is an allowable expense under the annual parties exemption.

Written BY

Steffen Hoyemsvoll
Steffen Hoyemsvoll

Co-founder, ops & tech, Spotify-hogger

January 2021

Are virtual work parties tax exempt?

Yes, work parties, even if hosted virtually are allowable expenses and qualify for the annual party exemption.

HMRC have confirmed with the Institute of Chartered Accountants in England and Wales (ICEAW) that the annual party exemption applies to virtual parties up to a value of £150 per head.

The original source material on the annual party exemption

You can read the original insight piece from According to the ICAEW, virtual parties will be treated for tax purposes in the same way that it would be for traditionally held parties.

💸 Annual exemptions confirmed by HMRC

The key parts being:

“Having considered the scope of section 264 ITEPA03 (annual parties exemption), we are pleased to confirm that the exemption will apply to the costs associated with virtual parties in the same way that it would for traditionally held, parties.
Therefore, the cost of providing food, entertainment, equipment and other expenses which may be incurred in hosting a virtual event, will be exempt, subject to the normal conditions of the exemption being met.
It is important to note that the intention of the exemption is to allow for costs of provision which are generally incurred for the purposes of the event itself, and that the event, along with any associated provision, is available to employees generally.”

How can I learn more about the annual exemption?

If you are looking for a more detail overview check out more from the ICEAW here.

Booking your next virtual party

Read all you need to know in advance by reading our booking guide for corporates, otherwise, head over to our Corporates booking page to find your performer for your next virtual team concert.

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