Entertaining

Entertaining clients, customers or third parties

• The cost of entertaining clients, customers or third parties in relation to the business is specifically disallowed as a deduction for tax purposes 
• When a room is hired for an event and entertaining also takes place it can be possible to claim tax relief on the cost of the room.
• The cost of entertaining should be separately analysed so that it can be added back for tax purposes.
• There are special rules in relation to overseas customers and VAT.

Entertaining one's self

The cost of entertaining yourself or members of your family, is not deductible as it is entertaining and under the general principle of "wholly and exclusively".

• The only exception is where family members are your employees. In that case the cost may be allowable providing that it is not excessive (measured by considering the expense on an "arm's length basis").

Entertaining employees

• Where an employer entertains his staff the cost is not treated as entertaining. It is staff welfare so it is allowable for tax purposes. Please note that Subcontractors / Freelancers are not Staff.