The usual face-to-face get together might not be possible, but virtual events can take place. Remote team games and activities can be a great way for smaller groups to celebrate.
But on top of employers facing the logistical challenges around employee wellbeing and motivation, there are also cost and tax considerations to consider.
In prior years employers would look to utilise the annual parties’ exemption. When this blog was originally published, HMRC had yet to clarify whether, in their view, this exemption could apply to virtual events.
However, on 23 November HMRC updated its guidance to confirm this exemption can apply where an annual function is provided virtually, as long as all other conditions are satisfied.
Employers can also think creatively about what seasonal benefits they can provide within other exemptions and reliefs. For example, the usual celebrations of Christmas parties and lunches may not be possible in the current environment, but home deliveries of trivial benefits below £50 such as hampers, workshop kits, or Christmas presents could boost the morale of your workforce and spread the Christmas spirit.
In cases where it’s not clear that a novel Christmas benefit would be covered by an existing relief, employers can engage with HMRC to ensure they’re compliant.
Even if exemptions aren’t available for the benefits you want to provide, there’s the option of including them on the PAYE Settlement Agreement (PSA) to prevent employees picking up the tax.
Now is the perfect opportunity to have that discussion with HMRC to expand your PAYE Settlement Agreement (P626) and get additional categories agreed.
No matter what rewards and benefits businesses provide to their employees, there may be reporting implications to consider. A full audit trail of the benefits provided, and the decisions made around the tax and national insurance (NIC) treatment (including conversations with HMRC) is very important.