What can you claim as a business expense when entertaining staff at a summer social?

What can you claim as a business expense when entertaining staff at a summer social?

By Published On: 21 July 2021Categories: Limited Company, Social, Tax

Now that Freedom Day has been and gone and life is returning to something that used to slightly resemble normality, there’s nothing stopping you from planning a summer social for you and your employees. But before you book anything, do you know how much you can claim as a business expense?

In this blog we explore your options, to help you have a celebration this summer.

Allowable business expenses

Staff entertainment is classed as an allowable expense, but there are some rules you must follow.

As a director of your Limited Company you’re able to host an event up to a certain value which will be exempt from Tax and National Insurance, so long as:

  • The total cost of the event is less than £150 per head, per year
  • The event is annually reoccurring
  • The event is open to all of your employees
  • The £150 limit per head includes VAT, and any other additional costs (such as accommodation or transportation to the event)
  • If any employees (including yourself) are part of a salary sacrifice scheme then you do not need to report the amount to those employees
  • Virtual events are also allowed. For example, if every employee was sent a hamper or something to enjoy during the virtual event, then this cost would be allowable, so long as each hamper didn’t exceed the £150 per person limit

What if you’re the only employee?

You can still enjoy an event! So long as it still satisfies the above criteria then you’re able to throw yourself a summer event, and it will remain to be exempt from Tax and National Insurance.

Remember that the cost is an exemption, not an allowance

If you exceed the £150 limit by even a penny, the entire expense will be subject to Tax and National Insurance. A staff event is classed as an exemption by HMRC, not an allowance, so it’s not advised to be tempted to go over the limit.

It’s easy to calculate the cost of an event:

If it’s just for you – total up all of the associated costs

If it’s for you and your employees – take the total cost and divide it by the number of employees, to get the cost per head

Final thoughts

Remember that the £150 limit is per person for the whole year, and not per event. So after everyone has been stuck indoors for the majority of the year so far, you’ve probably got the full total of your allowance to enjoy.

How can Vantage Accounting help?

Before making any reservations or plans be sure to run them past your accountant to double check everything is allowable. You certainly don’t want to be out of pocket (or worse, under HMRC’s microscope!), so it’s always worth getting the green light from an expert.

Vantage clients get to speak to their accountant by calling their direct number or emailing them for advice and support. If you’re in need of a specialist, friendly local accountant who’s on hand whenever you need them, look no further. Our services provide everything you’ll need to run your business confidently and successfully, from a tax and accounting point of view. Get in touch with our team to find out more today.

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

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