{"id":206,"date":"2009-01-07T20:52:27","date_gmt":"2009-01-07T20:52:27","guid":{"rendered":"http:\/\/www.clearbooks.co.uk\/blog\/?p=206"},"modified":"2018-11-07T10:29:42","modified_gmt":"2018-11-07T10:29:42","slug":"tax-on-business-entertainment","status":"publish","type":"post","link":"https:\/\/www.clearbooks.co.uk\/blog\/tax-on-business-entertainment\/","title":{"rendered":"Tax on business entertainment"},"content":{"rendered":"

Tax rules can be confusing when dealing with business entertaining expenses. Below are examples of the three main types of business entertainment and their tax implications.<\/p>\n

The three types are client entertaining, staff entertaining and subsistence.<\/p>\n

<\/p>\n

\n\n\n\n\n\n\n\n
Example<\/td>\nReclaim VAT<\/td>\nOffset Corp Tax<\/td>\nAvoid Income Tax&NICs<\/td>\nType<\/td>\n<\/tr>\n<\/tbody>\n
Meal with client<\/td>\nNo<\/td>\nNo<\/td>\nYes<\/td>\nClient entertainment<\/td>\n<\/tr>\n
Drinks for employees<\/td>\nYes<\/td>\nNo<\/td>\nNo<\/td>\nStaff entertainment<\/td>\n<\/tr>\n
Hotel for employee<\/td>\nYes<\/td>\nYes<\/td>\nYes<\/td>\nSubsistence<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n

There are different types of tax involved. We will look at the implications of these in turn.<\/p>\n

    \n
  1. Value added tax<\/li>\n
  2. Corporation tax<\/li>\n
  3. Income tax and National insurance contributions<\/li>\n<\/ol>\n

    1. Value added tax<\/strong><\/p>\n

    Reclaiming VAT on Business Entertainment<\/strong><\/p>\n

    You cannot reclaim VAT<\/em> on\u00a0business entertainment.\u00a0Business entertainment is defined as any form of free or subsidised entertainment or hospitality to non-employees.<\/p>\n

    You can reclaim VAT<\/em> on employee expenses and entertainment expenses if those expenses relate to travel and subsistence or where you entertain only employees.<\/p>\n

    VAT: Examples of non-tax allowable business entertainment <\/strong><\/p>\n

    i.e. business entertainment for non-employees:<\/p>\n