This time of year, most businesses owners will be looking forward to letting their hair down at various end of year functions as well as Christmas parties. The good news is there is a chance that Some of these events could be made all the merrier with some favourable treatment from HMRC as long as you stick to the rules.
If you’re planning on taking out that special customer for a nice meal to cement a good relationship then you may be out of luck when it comes to trying to claim back some of the expense. If you own a limited company, for example, you won’t be able to include it as an expense but you can put it down as a legitimate business expense which is probably better than paying for it out of your own pocket. Even here, however, it must be a legitimate business expense rather than simply taking a friend out for dinner. The same rules apply for sole traders.
So if the above sounds too complicated, you could always buy a gift for your customer. As long as it costs £50 or less per person receiving it and they must include your company branding otherwise they will be classed the same as entertaining.
When it comes to office parties, a party costing up to £150 a head and not a penny more is an allowable deduction as long as you only hold one of those events in a single tax year.