What is business entertainment and can we classify it as business expenses?
What is classified as a business entertainment in relation to the clients:
- Food and drink
- Cinema or theatre tickets
- Sports events tickets
- Entries to the clubs
One would think that if we have meeting with our client and invite him or her for a coffee or a meal it is classified as business expense. Potentially it will help us with getting in new business and build our brand. The same we sometimes buy present as a thank you to the client.
Unfortunately these are not business expenses!
Business entertainment is not classified by HMRC as business expenses. As a result you cannot deduct it as an expense to reduce tax bill. The same you cannot use it to lower VAT liability as business entertainment is 0% VAT.
Present for clients for marketing purposes – such as pens, notepads, mouse pads – with company logo or name, up to #50 per person.
But it cannot be food, drinks, tobacco or gift vouchers.
Why business entertainment?
By inviting clients for the coffee or meal you build company image and promote your business and your services. You cannot treat it as business expenses but classifying it as business entertainment you prove that it is connected to your business and it is not private expenses. As such you do not have to declare as owner’s drawings and pay personal tax.
Need an accountant? Call me now!
Fourth grant for self-employed will start at the end of April 2021, the exact date will be announced soon. Good news for people who did not quallfied for SEISS so far!!! If you started your seld-employment after March 2019 or you were not entitled to the...
VAT – Flat Rate Scheme What is it? VAT is calculated as a difference between VAT from sales (output VAT) and VAT from purchases (input VAT). Sometimes a person has a refund of VAT, but many times owes Vat to HMRC. Flat Rate Scheme is a set % of VAT that has to be...
I don’t know how many of you knows anything about trivial benefits. Many times, as an employer, you may think how to reward your hard working employees, give them something extra, some small token and in present climate save on taxes. As an employer you can buy your...