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It’s good news for 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.
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 a one-person 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.
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.
In order to be exempt from paying tax or National Insurance to HMRC, you must adhere to the following rules:
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:
Don’t waste your time entertaining tax too
Networking is a core part of contracting, 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.
To have a chat about claiming expenses, give us a call on 01253 362 062 or request a callback by filling in the form below.