Staff entertainment as a business expense – are you able to claim?

With lockdown and social distancing a thing of everyone’s distant memory, you may be looking forward to getting out and about this summer. So whilst the restrictions on socialising have been lifted, what are the rules in regards to what you’re able to claim as a business expense when entertaining staff?

In this blog we explore just that, to see what you’re entitled to and help you get planning your next big staff social.

Allowable business expenses

Is staff entertainment even classed as an allowable business expense? The good news is that it is! But before you order the champagne and entertainment there are some rules you have to follow.

HMRC’s rules

As a director of your own Limited Company you’re able to host an event up to a certain value that’s exempt from tax and National Insurance:

• So long as the event costs less than £150 per head, per year (including VAT, and any transportation and accommodation costs)
• the event is annually reoccurring
• the event is open and available to all your company’s employees
• if any of your employees (including yourself) are part of a salary sacrifice scheme you do not have to report the amount to those employees
• You’re also allowed to host a virtual event. So long as every employee is given the same thing (ie a hamper, bottle of wine, thing to enjoy during the event, etc) that all equals the same value, then it’s allowable

What if you’re the only person in your company?

Not to worry, you can still hold an event! As long as you satisfy all of HMRC’s requirements, you’re still able to throw yourself a party or event that’s exempt from tax and national insurance.

What about your employees?

You could have one employee or one hundred, it really doesn’t matter how many you have. The event is allowable so long as everyone has access to the same event, and it meets all of the set out above criteria, then you’re able to claim it as an allowable expense.

An exemption and not an allowance

If you go over the £150 limit by even 1p, the expense as a whole will be subject to tax and National Insurance. Staff events are classed as exemptions, not allowances, so don’t ever be tempted by more expensive events.

SG’s final thoughts

Remember! The £150 is your total amount for the whole year per person, and not per event, so don’t go crazy if you’re planning on a few events throughout the year!

How can SG Accounting help?

Whilst we’re probably not the best party planners, we’re amazing at accounting! So before making any plans be sure to run them past your new SG accountant to ensure you’re within HMRC’s rules.

If you’re not currently a client and are in need of the expert guidance of our accountants, get in touch. We only look after the complex needs of Limited Company contractors, and are experts in helping you maximise your take home pay whilst keeping the taxman happy. Our all-inclusive packages start from only £99+VAT per month, which also allows you to pick and choose which services are right for you. If this sounds like the type of service you need from your accountant, find out more today.

Note: All the information and advice in this blog post was correct at the time of writing.