Commentary on Sections Example 3 £150(Pe) – £50(E) = £100 Section 264: Annual parties and functions
1074.This section derives from, and gives statutory effect to, ESC A70B (Staff Christmas parties). That concession operates to exempt the employee from any income tax liability on specified office parties. See Change 56 in Annex 1. The section covers office-holders as well as employees although the concession does not expressly do so. See section 5(2).
1075.Although the heading to the concession is “Staff Christmas Parties”, the extension of the original concession to other parties indicates that it refers to annual functions in general. This is reflected in the less specific heading to this section: “Annual parties and functions”.
1076.Subsection (1) provides that the section applies to functions available to employees generally. In accordance with how the ESC was understood, it is made clear that there is scope for parties to be held in different locations.
1077.Subsections (2) to (5) show how the monetary limit is applied. Subsection (4)(b), read together with the whole section, makes it clear that the exemption effectively applies to persons attending as guests of the employees.
1078.When an ESC contains monetary limits, changes in those limits are made by press release or by republishing the ESC with different amounts. This is not possible for legislation. There are a number of exemptions in current legislation for which the Treasury fixes an amount. This Act adopts the same approach for rewritten concessions and includes a general power for the Treasury to increase the amounts in section 716. This provision is listed there.
1079.The equivalent exemption for the provision by way of a non-cash voucher (for example, a ticket for entry to a function is a voucher) is included in section 266(3) rather than within this section.