Entertainment and Parties
It’s good news for those of you who are limited company directors, as you too can claim tax relief on the cost of parties and entertainment. In our below guide, we’re sharing our advice on how to host your own event to make sure you can make the most out of the available tax relief and allowances.
Claiming the cost of your party
HMRC allows companies to claim the cost of annual events for employees. This cost can include food and drink, entertainment, transport, and accommodation.
Even if you’re the sole shareholder of your limited company, you can claim relief on the cost of annual company events. You can find more information about claiming limited company expenses in our guide.
How much can I claim?
More than one event can be held each year and provided that the total cost doesn’t exceed the £150 per head limit, you will be able to claim back tax on this amount. If you do hold more than one event in any given year, then you may need to demonstrate to HMRC that these are legitimate annual events as opposed to ad hoc nights out for your employees.
What criteria will I need to meet?
In order to be exempt from paying tax or National Insurance to HMRC, you must adhere to the following rules:
- The cost of the event must not exceed £150 per head, including VAT. Even if the total is just a fraction over the allowed amount, tax and National Insurance will be payable on the entire cost, not just the excess
- The event or events must be annual
- Every member of staff must be invited, even if there is only one person working for the business
- Staff may invite their partners, but only if all staff’s partners are invited and these invites count towards the £150 per head allowance
- The amount is not an allowance – you must claim for an actual event and provide receipt
- The £150 limit can be used at any time of the year at any number of events. However, HMRC will consider you liable for the whole amount if you go over this limit
Corporation tax relief is not available for business entertaining. Although you can claim the costs through your limited company, they will not be tax deductible in terms of calculating your business’ profits.
In order to justify the cost of entertaining as a business expense despite the lack of corporation tax relief, you will need to consider if the benefits received by the company will be worth the costs involved.
Gifts to customers are not allowable as an expense and should be treated as business expenses unless they meet the following criteria:
- The item in question costs less than £50
- The item must advertise your business in a conspicuous manner
- The gift must not be food, drink, tobacco or vouchers
Don’t waste your time entertaining tax too
Networking is a core part of developing business relationships, so it pays to entertain. However, that doesn't mean you should have to suffer the headache of what you can and can't claim back after schmoozing your next client.
Make sure you're getting the best advice when it comes to your finances. Whatever the occasion, our team are on hand to provide you with the support you need.
Our guide contains everything you need to know about claiming back your expenses. To have a chat with a member of our team, give us a call
Interested in finding out more? Speak with our expert Sales Team to see how we can work together.
Here's how you can get in touch...