With certain exceptions, expenditure on business entertainment or gifts is not allowable as a deduction against profits, even if it is a genuine expense of the trade or business. This includes expenditure by:
Individuals, partnerships and companies carrying on a trade, profession or vocation.- Individuals, partnerships and companies carrying on a property business.
- Investment companies.
- Employees and directors (in certain circumstances).
- Any other person who carries on a trade or business.
Assets used for the purpose of business entertainment do not qualify for capital allowances.
The legislation is at ITTOIA05/S45 for individuals and partnerships and CTA09/S1298 for corporate entities. Further guidance can be found as follows:
- property businesses - PIM2000 onwards,
- investment companies CTM08430,
- capital allowances CA27200,
- expenditure within the corporate intangibles regime CIRD12580.
The guidance on business entertainment expenditure is arranged as follows:
History | |
What is business entertainment? | |
Meaning of business entertainment: judicial guidance | |
Meaning of business entertainment: hospitality provided free of charge | |
Meaning of business entertainment: contractual obligation | |
Meaning of business entertainment: no hospitality if sufficient ‘quid pro quo' | |
Expenditure which is not allowable | |
Travelling costs | |
Exceptions: provided in the normal course of trade for payment | |
Exceptions: normal course of trade for payment: judicial guidance | |
Exceptions: normal course of trade for purpose of advertising to the public | |
Exceptions: entertainment of employees | |
Exceptions: entertainment of employees: meaning of incidental | |
Entertaining by employees | |
Meals provided for non-employees | |
Accommodation provided for non-employees | |
Training courses | |
Promotional events | |
Sponsorship | |
Expenditure paid to specialist providers: entertainment providers | |
Expenditure paid to specialist providers: mixed services | |
Expenditure paid to specialist providers: example | |
Gifts: overview | |
Gifts: exceptions: small gifts | |
Gifts: exceptions: free samples | |
Gifts: exceptions: gifts to charities | |
Prizes | |
Sales incentive schemes | |
Sales promotion schemes | |
Prizes and incentives: tax treatment of recipient |
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