Expenses - buying a present/dinner in return for borrowing a room

[vwdan]

Sorry for the long winded title, but I wasn't sure how to briefly explain. Firstly, this is merely a curiosity question that sprang into my head.

A few jobs ago I worked full time for a decent size corporation, and as part of our expenses policy, we were allowed to buy gifts and meals if we stayed with friends/family instead of a hotel. Obviously the presumption was that the overall cost would be much lower to the business. Anyway, I never took up this offer, but I was under the impression these were not tax deducible and would be just treated like normal expenses.

I wondered if this is actually the case? Is it something anybody has done? Would the company actually be taxed for entertainment, but worked on the presumption that this would still be less than forking out for a hotel room?

[Clare@InTouch]

There used to be a specific dispensation for such costs, as per here:

Friends and Family Allowance
Some existing dispensations also include a tax free scale rate for staying with family and friends when employees are required to stay overnight on business. HMRC has reviewed this policy and concluded that there is no legal basis for giving tax relief because it is not linked to any specific underlying expense. Therefore, a scale rate for staying with family and friends will not be included within the advisory system or given in any new dispensations. All agreed tax and NICs free scale rates in existing dispensations covering such an allowance will be withdrawn when the dispensation comes up for review.

HM Revenue & Customs: Revenue & Customs Brief 24/09

I'm not sure if there's anything that they replaced it with, but I don't think so. It makes sense as you're only allowed to claim for any additional and necessary cost you incur because of the business, and as much as staying with friends saves you money it's not a necessary cost of running the business. It's never the cost that matters, it's the underlying 'transaction' - which is why a train journey is allowable whether it's first class or coach class as long as the journey is business related.

I'll have a look to see if I find anything else on the subject though......

[LisaContractorUmbrella]

WCS - HMRC used to allow £25 per night for staying with friends and family but this was rescinded a while back - to my knowledge HMRC haven't replaced it with anything

[vwdan]

Worth knowing - thanks Glad to know I wasn't going mental.

[northernladuk]

I'll have a look to see if I find anything else on the subject though......

<Conversation in office>

Craig, arise from your knees and go look at this for us. Ta.

[Clare@InTouch]

He's lucky I even allow him to make me tea these days