Just so you know, by Grinch we mean HMRC and by Christmas we mean fun!
The party season is now here and you’ve probably booked your Christmas party and got all your corporate entertaining days all scheduled out – great and I bet you’re looking forward to it.
So a big SORRY to dampen your mood; but simply put, any money spent on entertaining clients, suppliers or business associates does not attract tax relief.
It’s marketing not entertainment I hear you say, well straight from HMRC, the definition of entertaining;
“The legislation defines entertainment as ‘includes hospitality of any kind’ but does not provide any further meaning for ‘entertainment’ or ‘hospitality’.”
Straight forward right? Not really, but to be safe, let’s just say if you have to argue it’s not entertainment, then it probably is.
Let’s be clear, just because this type of entertaining is not tax deductible doesn’t mean you’re not allowed or shouldn’t do it – providing it is genuine business-related entertainment.
It’s not all bad though; notice how employee entertaining was not mentioned above? That’s because there’s an exception to the rule.
Employee entertaining (providing it meets the criteria) attracts tax relief and unusually in tax, there are no caps on the amount businesses can spend on employee entertaining and still receive tax relief!
Now that’s a nice present from HMRC or is it? See A Christmas Gift from HMRC? and find out.
So when you’re out over the party season enjoying yourself, just remember that, if you’re entertaining clients, suppliers or business associates, then, you will not save any tax, Bah Humbug!
But if your entertaining your employees, then, HMRC can help pay your bar bill!