With Coronavirus restrictions in place throughout the country, this year a number of business will be unable to offer their normal staff Christmas party. Are businesses able to utilise the £150.00 exemption at another point in the year?
The annual function exemption explicitly states that it applies to an annual party or similar annual function provided for employees and available to them generally or available generally to those at a particular location.
This means the exemption if there is more than one function or party within a tax year, as long as the cost does not exceed £150.00 per person for both functions, it will remain exempt from Income Tax. If however a business had two parties in a tax year and the combined value of both parties exceeds £150.00 per head, then only one of parties will qualify for the exemption. The value that is reported as a benefit to the employee is calculated at the total cost of the second function, not just the excess above £150.00.
Employers who utilise this exemption at Christmas may wish to consider doing this at a different point in the year and still qualify for the exemption.