Entertainment - is it worth expensing?

[rmmc]

Staff entertaining is an allowable expense if it fulfils certain criteria. This link should help HM Revenue & Customs: Entertainment

Staff entertaining is an allowable expense if it fulfils certain criteria, however, it is taxable on employees unless it is an exempt (such as annual function).

[rmmc]

Let's start with ignoring who you take out (clients etc). Concentrate on whether it is staff entertaining which is allowable for CT relief. If it's open to all employees (assume yourself as the only employee) and it's an annual event i.e. Xmas, then you can claim up to £150 per head without BIK issues. If your company happens to invite 5 other people, then your company can expense up to £900 (claim for the actual cost not round sums which would coincidently added up to £900 exactly) and have it deducted for CT. Flip side to this is that it's coming from your company so it depends how generous you want to be even though it maybe allowable.

Oh, and don't forget to reward your accountant (Just kidding!!)

I am afraid this is not correct. Once again incorrect advice from this company or the user.

You can have a annual function and the limit is £150 per head attending the events. You can invite partners of the staff. However if you have one employee and 5 supplier, which is obvious that it is business entertainment. And staff present at party is merely a host. I would be surprised that any one can convince to the inspector otherwise.

Entertaining client using staff annual parties is breaking the rules and this could be tax evasion which is illegal. And it would be offence under money laundering rules too. I am surprised that Craig and his firm advocating this practice.

It may be stating obvious, this exemption applies to "Annual Events", not one of events such as 10th anniversary party etc. Also if you do not have this events regularly, then it would be difficult to prove that it is an annual events.

HMRC started picking on this point. Due to recent recession, some company did not organise the event, subsequently, they have had events and had difficulty convincing HMRC that it is an "Annual Events".

Also you can not claim vat on non employee portion of the annual function cost. Further on the VAT, if you only employee of the director and have a annual function, you can not claim the vat. As vat is blocked for directors only events.

[northernladuk]

I can't imagine spending that much! But that is what I wanted clarification on, so thanks again for your time. I think this is the way I will go. I'm planning to take out a few client staff, seeing as my extension has been signed off so it's certainly a business development thing.

I don't think taking your client out for an xmas meal is classed as business development. It is more a social even to schmooze him but it isn't business.

[Platypus]

Let's start with ignoring who you take out (clients etc). Concentrate on whether it is staff entertaining which is allowable for CT relief. If it's open to all employees (assume yourself as the only employee) and it's an annual event i.e. Xmas, then you can claim up to £150 per head without BIK issues. If your company happens to invite 5 other people, then your company can expense up to £900 (claim for the actual cost not round sums which would coincidently added up to £900 exactly) and have it deducted for CT. Flip side to this is that it's coming from your company so it depends how generous you want to be even though it maybe allowable.

Personally I think you'd be pushing the definition of a staff event if one member of staff and 5 guests turn up.

EDIT:

II think this is the way I will go. I'm planning to take out a few client staff, seeing as my extension has been signed off so it's certainly a business development thing.

You've missed the point: Craig is advocating using the Annual Staff Party Allowance to take your customers out on the lash, which I'd say is bending the rules, since these rules are not for 'business development' expenditure.
See http://www.hmrc.gov.uk/manuals/eimanual/eim21690.htm

Second EDIT:
See also http://www.rossmartin.co.uk/index.ph...ual-functions-

* The total cost must not exceed £150 per head, per year.
* Cost includes VAT, transport and accommodation.
* £150 is not an allowance, so if the cost is £151, the whole benefit is taxable.
* The event must be primarily for entertaining staff.
* It must be open to all staff (in that location, if you have several branches or departments).
* The event is not just for directors.
* The cost is an allowable expense for your business.
* You can claim back input VAT but this may be restricted if you are also entertaining customers.

[ChimpMaster]

Let's start with ignoring who you take out (clients etc). Concentrate on whether it is staff entertaining which is allowable for CT relief. If it's open to all employees (assume yourself as the only employee) and it's an annual event i.e. Xmas, then you can claim up to £150 per head without BIK issues. If your company happens to invite 5 other people, then your company can expense up to £900 (claim for the actual cost not round sums which would coincidently added up to £900 exactly) and have it deducted for CT. Flip side to this is that it's coming from your company so it depends how generous you want to be even though it maybe allowable.

Oh, and don't forget to reward your accountant (Just kidding!!)

I can't imagine spending that much! But that is what I wanted clarification on, so thanks again for your time. I think this is the way I will go. I'm planning to take out a few client staff, seeing as my extension has been signed off so it's certainly a business development thing.

[Craig@Clarity]

Let's start with ignoring who you take out (clients etc). Concentrate on whether it is staff entertaining which is allowable for CT relief. If it's open to all employees (assume yourself as the only employee) and it's an annual event i.e. Xmas, then you can claim up to £150 per head without BIK issues. If your company happens to invite 5 other people, then your company can expense up to £900 (claim for the actual cost not round sums which would coincidently added up to £900 exactly) and have it deducted for CT. Flip side to this is that it's coming from your company so it depends how generous you want to be even though it maybe allowable.

Oh, and don't forget to reward your accountant (Just kidding!!)

[ChimpMaster]

Craig - the general consensus is as you describe. So if I wanted to take my client team out to a Christmas lunch, which could add up to a figure of a few hundred £, would this best be claimed as Entertainment or is there a more tax efficient way to expense this?

[Craig@Clarity]

Looking at it from a personal point of view, it would be better to have the company pay for the expense even if it is not allowable for corporation tax relief as your ltd co would be paying for it direct rather than it coming out of your taxed income.

[SueEllen]

The only reason I see is to get funds out of the company, i.e. almost like extending your basic rate tax band.

When I enquired with my accountant a few years ago that's what he basically implied.

Anyway if you are claiming things like subsistence and travel it's not really hard to put in your books.

[Craig@Clarity]

Staff entertaining is an allowable expense if it fulfils certain criteria. This link should help HM Revenue & Customs: Entertainment

[Fred Bloggs]

Don't forget that you can expense a company social event upto £150 per person and put it through as a company expense. At least you used to be able to........ I think you still can.

[northernladuk]

Nice question. SJD sent a notification around about claiming entertainment through the company. Even though it helping with tax efficiency there was some benefit of doing it this way. They didn't explain why and I haven't had the time to ask so am also interested in this.

[ChimpMaster]

Entertainment is not a normal expense, in that it is subject to corporation tax, currently 21% and 20% next year.

This makes me wonder : for a contractor who remains under the 40% tax threshold, is it actually worth claiming Entertainment as an expense? Is it pretty much the same financial conclusion as having paid for it privately?

The only reason I see is to get funds out of the company, i.e. almost like extending your basic rate tax band.