Treating yourself and staff to a summer social – what you can claim as a business expense

The sun is shining, almost everything is open again and it finally feels like summer, hooray! You’ve worked hard throughout the pandemic and now that we’re all allowed to socialise again, it’s a good time to get out and enjoy everything that’s available to you.

So whether you’re contracting or freelancing alone or you have employees, you’re able to claim some of the cost from HMRC. But before you go ahead and order the champagne you’ll want to know what’s available. In this blog we explore just that.

Allowable business expenses

Staff entertainment is classed as an allowable expense, but there are some rules you must follow.

Entertaining rules

If you have a Limited Company, as a director you’re able to host an event up to a certain value which is exempt from Tax and National Insurance. Your event must:

• Cost no more than £150 per head, per year
• Be an annual event
• Be open to all employees (if you have any)
• Include VAT and any other additional costs (such as transportation to and from the event and accommodation)
• If you or any of your employees are part of a salary sacrifice scheme you do not have to report the event amount to those employees
• You’re also allowed to host virtual events. If you were to send all employees a hamper for example to enjoy during the event, so long as it costs less than £150 and everyone is sent one, this would be allowed

What if it’s just you?

You’re still allowed to hold an event that’s exempt from Tax and National Insurance, so long as the above criteria are adhered to.

How about you and your employees?

Regardless of the number of employees you have, so long as it’s available to all of them and meets the criteria, the number of employees is limitless.

The cost of an event is an exemption, not an allowance

If you go over the £150 limit, the total expense will be subject to Tax and National Insurance. An event specifically for employees is classed as an exemption, not an allowance, so it’s never worth going over the limit.

It’s really simple to calculate the cost of an event:

If it’s just you – just total up all of the associated costs

If it’s for you and your employees – take the total cost of the whole event (including any transportation and accommodation costs) and divide it by the number of attendees to get the cost per head

Final thoughts

Remember that the £150 is per person, per year, not per person per event. So after a fairly rubbish year of being stuck indoors with little socialising you’ve probably got your whole £150 to enjoy.

How can Taxevo help?

Before making any reservations it’s advisable to run your plans by a specialist accountant, to ensure everything is above board and you won’t be left out of pocket.

As a Taxevo client you’ll get direct access to your specialist accountant, who will be able to provide expert advice on topics such as allowable business expenses and other topics that affect freelancers and contractors. Our packages start from only £25 per month, and include everything you’ll need to be a success from a tax and accounting point of view. Get in touch today to find out more.