As a general rule entertaining expenses are not deductible. However, there are some types of expenditure for which a deduction is allowed.
The main exception is entertaining of employees, the costs of which can be deducted.
Promotional events are not treated as entertainment and the costs can be deducted. However, the costs of any food, drink or any other hospitality are not allowable.
Example:
LMN Ltd is a family company.
The company holds a Christmas party each year, which is attended by staff and their partners.
The company can deduct the costs of holding the party in computing its business profits. This disallowance for entertaining does not apply to staff entertaining.
As long as the cost is less than £150 per head, the employees will not suffer a benefit in kind tax charge as the benefit will fall within the exemption for Christmas parties and similar functions.
Please register or log in to add comments.
Download videos Images and reels from all social media platforms like Facebook, Instagram, Tiktok, Pinterest, Daily motion etc, with in seconds.