palmersport - business expense?
Discussion
I’m not an Accountant but from the days when I did a lot of client and staff entertaining,:-
I remember we had to pay benefit in kind for any staff jollies (over £150 per head from memory), this was paid annually via a PSA.
Although client entertaining didn’t attract BiK, it wasn’t deductible for tax purposes.
I’m off to a Palmersport day in June, they look really good so hope you get to go.
I remember we had to pay benefit in kind for any staff jollies (over £150 per head from memory), this was paid annually via a PSA.
Although client entertaining didn’t attract BiK, it wasn’t deductible for tax purposes.
I’m off to a Palmersport day in June, they look really good so hope you get to go.
foliedouce said:
I’m not an Accountant but from the days when I did a lot of client and staff entertaining,:-
I remember we had to pay benefit in kind for any staff jollies (over £150 per head from memory), this was paid annually via a PSA.
Although client entertaining didn’t attract BiK, it wasn’t deductible for tax purposes.
I’m off to a Palmersport day in June, they look really good so hope you get to go.
This is my understanding too.I remember we had to pay benefit in kind for any staff jollies (over £150 per head from memory), this was paid annually via a PSA.
Although client entertaining didn’t attract BiK, it wasn’t deductible for tax purposes.
I’m off to a Palmersport day in June, they look really good so hope you get to go.
The £150 can be spread over multiple events. I have ‘Christmas parties’ of £20 each Chinese takeaways throughout the year.
One thing to watch with it is that the amount cannot exceed £150. If for example you spent £160 on one event none of it would be allowable under the £150 rule.
trickywoo said:
foliedouce said:
I’m not an Accountant but from the days when I did a lot of client and staff entertaining,:-
I remember we had to pay benefit in kind for any staff jollies (over £150 per head from memory), this was paid annually via a PSA.
Although client entertaining didn’t attract BiK, it wasn’t deductible for tax purposes.
I’m off to a Palmersport day in June, they look really good so hope you get to go.
This is my understanding too.I remember we had to pay benefit in kind for any staff jollies (over £150 per head from memory), this was paid annually via a PSA.
Although client entertaining didn’t attract BiK, it wasn’t deductible for tax purposes.
I’m off to a Palmersport day in June, they look really good so hope you get to go.
The £150 can be spread over multiple events. I have ‘Christmas parties’ of £20 each Chinese takeaways throughout the year.
One thing to watch with it is that the amount cannot exceed £150. If for example you spent £160 on one event none of it would be allowable under the £150 rule.
"Yes" is the answer.
HMRC does not like "Entertaining" at all. Therefore, they have very tight rules regarding how it is treated for tax purposes.
First of all, if the "Entertaining" is for outsiders i.e. customers, potential customers, suppliers or any other business associates, it is NEVER allowed in any circumstances AS A TAX DEDUCTIBLE expense. This does not mean that a business cannot have such expenditure. What it does mean is that it will not get any tax relief against its business profits for such expenditure.
Secondly, money spent to "Entertain" staff IS allowed as a business cost PROVIDED it stays within the limits mentioned above AND is available to all members of staff (i.e. no special treatment).
In the hands of the employee, "Entertainment" might be treated as a Taxable Benefit in Kind UNLESS it meets the above tests regrading expenditure limits and availability to all staff.
Spending money on a corporate track day would be reclaimable only if it was for staff and did not exceed the thresholds.
If the expenditure was for business associates, it would not be allowable as a tax deductible cost in the business.
HMRC does not like "Entertaining" at all. Therefore, they have very tight rules regarding how it is treated for tax purposes.
First of all, if the "Entertaining" is for outsiders i.e. customers, potential customers, suppliers or any other business associates, it is NEVER allowed in any circumstances AS A TAX DEDUCTIBLE expense. This does not mean that a business cannot have such expenditure. What it does mean is that it will not get any tax relief against its business profits for such expenditure.
Secondly, money spent to "Entertain" staff IS allowed as a business cost PROVIDED it stays within the limits mentioned above AND is available to all members of staff (i.e. no special treatment).
In the hands of the employee, "Entertainment" might be treated as a Taxable Benefit in Kind UNLESS it meets the above tests regrading expenditure limits and availability to all staff.
Spending money on a corporate track day would be reclaimable only if it was for staff and did not exceed the thresholds.
If the expenditure was for business associates, it would not be allowable as a tax deductible cost in the business.
Eric Mc said:
It WILL be taxed as income.
I'm not trying to be awkward, I just think you choice of words, for once, is confusing.It's not taxed as income, it's just not an allowable expense, they are different and it's an important distinction to base any spending decision on.
If a director entertained potential clients on a Palmersport day and let's be honest, whilst they're likely clients, they're all probably in the 'jobs for the mates' brigade, but still fits the criteria, then a director, who at presumably this level of spending ability, will be a higher rate tax payer and to partake ordinarilly in such a 'jolly' would pay out of their own heavily taxed pocket at 32.5-40%.
If the company pays for it, they don't, so it's still better for the company to pay it and add back in the computations.
Note further complexities with VAT!
dirty boy said:
Note further complexities with VAT!
The OP mentions "small company" - if it's a director only company I believe there is a curveball with VAT that the company can't reclaim VAT for directors-only entertainment. I am in that situation as my company has corporate seats at Tottenham Stadium but it can't reclaim the VAT on them.dirty boy said:
I'm not trying to be awkward, I just think you choice of words, for once, is confusing.
It's not taxed as income, it's just not an allowable expense, they are different and it's an important distinction to base any spending decision on.
If a director entertained potential clients on a Palmersport day and let's be honest, whilst they're likely clients, they're all probably in the 'jobs for the mates' brigade, but still fits the criteria, then a director, who at presumably this level of spending ability, will be a higher rate tax payer and to partake ordinarilly in such a 'jolly' would pay out of their own heavily taxed pocket at 32.5-40%.
If the company pays for it, they don't, so it's still better for the company to pay it and add back in the computations.
Note further complexities with VAT!
There are two aspects. If the business is disallowable as a cost in the business, the BUSINESS gets no tax relief against the business profits.It's not taxed as income, it's just not an allowable expense, they are different and it's an important distinction to base any spending decision on.
If a director entertained potential clients on a Palmersport day and let's be honest, whilst they're likely clients, they're all probably in the 'jobs for the mates' brigade, but still fits the criteria, then a director, who at presumably this level of spending ability, will be a higher rate tax payer and to partake ordinarilly in such a 'jolly' would pay out of their own heavily taxed pocket at 32.5-40%.
If the company pays for it, they don't, so it's still better for the company to pay it and add back in the computations.
Note further complexities with VAT!
If a director is using his business to pay for something which is for his own benefit, such as sponsoring his own racing car, then that expenditure will both be disallowed for business purposes AND taxed in the hands of the director as part of his remuneration from the company.
There were a couple of tax cases a few years ago where this was the decision reached by HMRC. In those cases the expenditure was for a director's daughter who was involved in show jumping and hospitality at top flight rugby games.
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