Having worked closely with a number of clients who are trying to organise events on tight budgets we decided to look at the tax implications of running corporate team building events and see whether there are any tax benefits or dangers we should look out for.
It appears that during the 2009 / 2010 tax year the tax rules are going to stay the same and the following sections of HMRC Help Sheet 207 2009 testify to the Tax Exemptions of team building events.
Source: HS207 2009-2010 Non Taxable Payments or Benefits for Employees – A Govt Help-sheet available from the HM Revenues & Customs website.
i. Employer-funded or employer-reimbursed training
This exemption covers the costs to your employer of work related training throughout the entire spectrum of practical or theoretical skills and competences you are reasonably likely to require for your current or likely future jobs and tasks with your existing employer.
The Tax Exemption Includes:

Employee development schemes

Activities intended to develop skills you need in leadership and teamwork

Training which is provided by a third party rather than your employer

The many ways in which training course and events can be delivered are covered including full-time and part-time training, internal training courses run by your employer, courses which are run externally or by a third party, and courses which comprise any combination of these.
ii. Christmas or other Annual Party
Also exempt are annual events, parties or functions of a similar nature, such as a Christmas dinner and a summer party, which are open to staff generally and which cost no more than A�150 a head in total to provide.