Summer entertaining – the rules behind having a good time

Summer is finally here, hooray! Grab the sun cream, fire up the BBQ and pour yourself something cold, it’s time to enjoy the weather and some much needed socialising. But before you make any plans, what are the rules when it comes to work social events and what you’re able to claim as business expenses when entertaining your staff?

In this blog we explore all the rules surrounding events, to make you aware of what you can and can’t do.

Allowable business expenses

The great news about staff entertainment is that it is classed as an allowable business expense. But before you go booking that yacht and order of champagne there are a number of rules you must follow in order to it to all be above board.

HMRC’s rules

As a director of your own Limited Company you’re able to host an event (or number of events) throughout the year that are exempt from tax and National Insurance, so long as:

• The event/s cost less than £150 per person, per year (this includes VAT, transportation and accommodation costs)
• The event occurs every year
• It’s available to every member of staff in your company
• You don’t have to report the amount to any staff who are currently part of the salary sacrifice scheme
• You don’t have to attend the event in person, as virtual events are also allowed. To qualify you must ensure all staff members receive the same item, such as a bottle of wine, a hamper, goodies to enjoy during the event, etc, that all hold the same value

Party for one!

If you’re the only employee of your Limited Company you’re still able to host an event, so long as you stick to all of HMRC’s rules.

What about employees?

It doesn’t matter how many employees you have, you’re still able to host an annual event. As long as everyone has the same level of access to all events, they’re allowable as a legitimate business expense.

Remember that an event is an exemption and not an allowance

Don’t be tempted to exceed the £150 limit, as even a penny over will mean the total cost is no longer exempt from tax and National Insurance. Events for employees are classed as exemptions and not allowances, and it’s really not worth going over the limit set by HMRC.

Aardvark’s final thoughts

Remember that the £150 limit is per person per year, and not per event. So if you’re hoping to have a Christmas party alongside your summer soiree, the amount is for all events combined.

How Aardvark Accounting can help you

Whilst we probably won’t be able to party as hard as some of our contracting clients, we can certainly keep them on the right side of the taxman when it comes to ensuring they stick within the staff entertaining rules!

We’re also experts in everything to do with Limited Company contractor accounting and are able to help you navigate the sometimes confusing and complex world of contracting. We work hard to ensure you pay the right amount of tax and not a penny more, maximising your take home pay and making your money work as hard as it possibly can. If this sounds like the type of support you need to help make your Limited Company a success get in touch today, or take a look at our packages.