Entertaining can be Taxing!

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Money spent entertaining employees IS tax deductable.

Author: Nicola Porter
Published:
Reading time: 1 minute

This article is 6 years old.

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As the festive period fast approaches, employers maybe look to plan an office Christmas party, or general gathering.

The question is, can these be considered a business cost for tax reasons? According to HMRC ‘business entertaining’ i.e. taking customer and clients out for dinner or drinks, is not tax deductable.

However, money spent entertaining employees IS tax deductable, if is for an annual event, such as Christmas parties or summer balls. It is only for these situations though that employee entertainment is tax deductable without incurring a taxable benefit in kind for the employee (which other types of entertaining would).

There is a limit to this, of £150 per year, per employee, which is inclusive of any VAT.

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