Business Expenses - Entertaining

Entertaining expenses of taking customers out for meals can be claimed as a business expense; though there is little or no tax benefit in doing so.

Usually entertaining is paid for commercial reasons of securing new contracts rather than to save tax on a night out. For freelancers it often makes sense to pay entertaining and gifts personally to avoid adding back corporation tax calculations and disclosing on P11d forms.

There are two exceptions to these general rule:

  • Gifts of less than £50 that carry a conspicuous advertisement for the business. These type of gifts exclude food, drink & vouchers.
  • Staff entertainments, such as Christmas or other annual event, is an allowable business expenses and will not be treated as a benefit; provided the total cost per employee is less than £150 per annum and open to all staff.

You must: Have a receipt for anything you do claim, and be able to demonstrate that your guests were clients or potential clients (keep copies of invite emails).