Staff Entertaining - allowable expenses



In the article you will find the following information:

  1. What's Staff Entertainment?

  2. Who is affected and what conditions must be met?

  3. Will it reduce Corporation Tax?

  4. Are there any limits?

  5. Additional Personal Income Tax

  6. What about Christams Party and samples




Staff entertainment, i.e. entertainment organized by the employer for employees.


It can be a dinner at a restaurant, a meeting at a bar or an outdoor party.





This only applies to employees.


In practice, the definition of ‘employees’ is extended to include retired members of staff and the partners of existing and past employees. It does not include staff of associated companies or other companies in the same group.


In order to be considered a Staff Entertainment activity, it must be the wholly and exclusively for the purpose of the business.





The costs related to such an event for employees are an acceptable expense and it can be "included" in the company's costs, whcih is decreasing the corporation tax.





Staff Entertainment has no limits but it may be taxed.


You should keep in mind that if partners/employees in the company have a close relationship, and the cost covers only shared meals, you should have a very good explanation for the HMRC and give the reason for all meetings, because HMRC may treat it as a usual social meeting.





Although the expenditure is allowable, the employees themselves may have to pay Personal Income Tax and the employer will have to report this on form P11D.


There are a few exceptions:

* Annual Party Exemption which is £150 per person per year.

The amount of £150 does not need to be used at once. It can be spread over several events throughout the tax year as long as the maximum amount is £150 per head

* meals - e.g. the meal is provided in a canteen or on the employer’s premisess or meals purchased during business trips (meal allowance)





Christams Party is usually included in Annual Party Exemption and it also applies to online or virtual parties.


To be exempt, the party must:

  • be open to all your employees

  • be annual

  • cost £150 or less per person

It can be done for all of your business location.

You can also put on separate parties for different departments, as long as all employees are invited.


Allowance include meals, drinks, transport to and from party, staying overnight but it might not exceed £150 per head.


It can also be a Summer Barbecue as long as it's annual.


If you provide two parties then the amount of £150 must be spread between bouth of them.

For example

You spent £50 per person on Summer Barbeque.

The amount you have left per head is £100 and you can spend it on Christmas Party.


If you spend more then £150 per person then the amount over £150 must be declared on P11D.

Sample 1

You spent £160 per person on Christmas Party. You must declare amount of £10 on P11D.

Sample 2

You spent £100 per person on Christmas Party and £80 per person on Barbeque Party.

Total amount you spent per person is £180. You must declare £30 on P11D.



The allowance must be within tax year,which is from 6th of April till 5th of April.

Not your company financial year.



Source: BIM45033, EIM21671, EIM21690





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