HM Revenue & Customs (HMRC) has recently confirmed that the annual parties exemption in ITEPA 2003 s 264 can apply equally to virtual parties, such that 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.

The example scenario they have used states ‘A company holds one annual function in a tax year and does so virtually using IT. All employees are invited and each is provided with a hamper consisting of some food and drink to be enjoyed by the attendees during the party. The total cost per head is £100 which is within the £150 exemption and so the exemption applies.’