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  3. Can my company pay for business entertainment?

Can my company pay for business entertainment?

As a director of your limited company, you can get your company to cover some of the business-related entertaining expenses. Entertaining expenses cover things like treating clients or buying business-related gifts.

HMRC classes entertainment as “business entertainment” when it is provided free of charge to people who are not employees of your business. But as a general rule of thumb, business entertaining is not an allowable tax-deductible expense. This means that although the business can pay for it, it is not deducted from the company profit before corporation tax is calculated. Also, you cannot claim VAT on this expenditure.

Now, here is the tricky part. In most cases, you cannot use this expense to reduce your company taxable profit or get tax relief. So, if you paid for the business entertainment out of your own pocket you might not get the money back through your company accounts. It is a bit like not claiming the expenses at all, tax-wise.

Updated on 23rd October 2023

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