Entertaining staff

Summer socials and entertaining staff – what you can claim as a business expense

By Published On: 29 June 2021

Whilst the UK’s Covid freedom day has been delayed until July 19th, there’s nothing stopping you from planning a summer social for yourself or those who you work closely with. So what can you claim as a business expense?

In this blog we explore your options, to help you get back out there and have a celebration this summer.

Allowable business expenses

So is staff entertainment an allowable business expense? The good news is yes! But as with everything associated with HMRC, there are some rules.

Entertaining rules to follow

As a director of your Limited Company you’re able to put on an event up to a certain value which will be exempt from Tax and National Insurance, so long as:

  • The cost of the event is less than £150 per head, per year
  • The event is annual
  • The event is be open to all employees
  • The £150 limit per head includes VAT, and any other additional costs (such as transportation to the event or accommodation)
  • If any of your employees (including yourself) are part of a salary scarify scheme you do not have to report the amount to those employees
  • Virtual events are also allowed. If every employee is sent a hamper to enjoy during the event, so long as each hamper costs less than £150 and everyone is sent one, it’s allowable

What if it’s just you?

So long as your event meets the above criteria then you’re able to throw yourself a party for one that’s exempt from Tax and National Insurance, even if you’re the only employee of your Limited Company.

How about your employees?

It doesn’t matter how many employees you have, the event is allowable if it’s available to them all and meets the above criteria, then you’re able to claim it as an allowable expense.

Remember that the cost of an event is an exemption, not an allowance

If you exceed the £150, even by a penny, the entire expense will be subject to Tax and National Insurance. A staff event is considered an exemption by HMRC, not an allowance, so don’t be tempted to go over the limit.

It’s easy to calculate the cost of the event:

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

If it’s for you and your employees – take the total cost and divide it by the number of employees, to get the cost per head

Final thoughts

Don’t forget that the £150 limit is per head for the entire year, not per head per event. So after a rough year for everyone (and very limited ability to go out and have fun) you’ve probably got all of your allowance to enjoy.

How can Aardvark help?

Before making any plans be sure to double check with your accountant if they’re allowable. You don’t want to be out of pocket, (or worse, in trouble with HMRC!) so it’s always worth running your plans past an expert.

If you’re an Aardvark client you can speak to your expert Accountant by calling their direct number or emailing them for advice and support. If you’re on the lookout for a specialist contractor accountant who knows the complex needs of a Limited Company contractor like the back of their hand, look no further. Our packages start from only £69 per month, and our services cover everything you’ll need to be a contracting success. Get in touch to find out more today.

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