An annual exemption for virtual home-based events allows businesses to spend up to £150 per person tax-free. The money can be spent on things like entertainment, food and drink.
Businesses can also purchase a gift (up to the value of £50) for an employee tax-free.
These allowances are the total allowed for the year, so if a business has already used the amounts in full, for example in a company summer party, no further tax-free exemption can be applied.
There are a few caveats to make sure that the business isn't slapped with a charge for unpaid tax and NICs later, these include:
- Records must be kept to show the people that 'attended' the virtual party.
- All employees working for the business must be given the option of the party and/or gift.
- If employees are allowed to purchase their own food and drink, they can claim the expense but must keep records.
- Gifts must not be cash or given in exchange for anything.
You can read more about the HMRC tax reliefs for social functions at their website.