HMRC should increase the annual limit that a business can spend on social events for staff to £500 for a one-off basis for this tax year, the accountancy firm says.

The firm says that this act would recognise the fact that staff parties were unable to go ahead throughout 2020 and allow employers to thank their staff for their work over the last year in the return to ‘normality’.

The firm also states that it would also provide a much-needed cash flow into the hospitality sector in city centres.

HMRC rules currently allow employers to spend up to £150 per employee per tax year, on events such as Christmas parties or summer dos.

Businesses do not have to report to HMRC or pay tax and national insurance on a party or social function if it is open to all employees, is an annual event, such as a Christmas party or summer barbecue, or costs £150 or less per person. If there are multiple events in the year it is still exempt from tax if the combined cost of the events is no more than £150 per head.