COVID brought business entertaining and staff parties to an abrupt halt. As we emerge into the spring sunshine, many companies are now planning to go back to face-to-face dinners, golf and events. So, let’s have a quick refresher on the rules of limited company expenses and what you can claim.

1. VAT paid on the cost of business entertainment can’t be reclaimed. However, what is considered as entertainment and what counts as a more general business staff-related expense isn’t immediately clear
2. Tax-deductible expenses have to be ‘wholly and exclusively’ used for your company. If you merge business and personal – for example on a work trip that has a few days holiday added onto the end – business part of the cost is the only element that is tax deductible
3. Allowable expenses for your limited company include:

• • travel and accommodation costs for business trips (this does not include commuting costs)
  • advertising and marketing costs
  • social event costs for your staff (make sure the cost doesn’t exceed £150 per person, that it’s an annual event, and that it’s open to all staff)

 

Kim Redwood-Lee, Managing Director, Oscar Fairchild says: “As a rule, money spent on entertaining clients or gifts is not an allowable expense, even if it’s a genuine business expense – this means they aren’t usually tax deductible.  As businesses open back up after COVID it’s important to remind everyone involved to record all limited company expenses, that means receipts, invoices, and any other important paperwork.  Also bear in mind that you do need to keep records for at least six years following a filed tax return – HMRC expects this and could investigate within this timeframe.”