An annual exemption of up to £150 per head is available to businesses every tax year and can be used for any annual staff functions. As long as the costs do not exceed £150 per head on average and the event is open to all employees, e.g. not just for senior staff, there is no taxable benefit for the attending employees.

With many businesses planning virtual parties this year, HMRC has confirmed that these fall within the scope of the exemption. So if you are holding your Christmas party online this year, you will be able to provide food and drink to your employees and take advantage of the £150 per head tax break.

Important note: if the cost exceeds £150, it is all taxable, not just the excess.