Are entertainment expenses tax deductible?

The world of business is not confined to one place. And it’s not uncommon for clients to want to connect with or thank their colleagues or clients outside of the office.

For many businesses, entertaining clients and customers is part and parcel of their marketing strategy. So it’s common practice for companies of all shapes and sizes to factor entertainment expenses into their marketing budget.

From dinners and events, through to taking advantage of networking opportunities, there are lots of ways to connect and engage with your clients, colleagues, and customers outside of the office.

But are entertainment expenses tax deductible?

Despite popular belief, business entertaining isn’t tax deductible, and you won’t be able recover VAT on expenditure. However, there are some circumstances in which you will be eligible to claim back the VAT.

When can I claim back VAT?

There are a few circumstances where you can claim back the VAT, including if the entertainment event you hosted included your company’s employees. If employees are in attendance, you can then reclaim on the employee element of your costs.

Is client entertainment an allowable deduction for corporation tax?

Although entertainment expenses are not considered as being an approved expense by HMRC, it is still advisable to always pay for any entertainment expenses using your business bank account and any expenses that you process must always be genuine business costs and not excessive.

Remember, although the vast majority of business entertainment is not tax deductible, it can be a great way to build a client base, secure new contracts, forge strong relationships with clients and optimise morale in the workplace.

Do you need advice on business entertainment expenses?

Whether you’re a well-established business or a start-up finding your feet, understanding expenses can be a challenging and daunting feat. The good news is that there are lots of experts out there who are able to offer you advice on what is and isn’t tax deductible. An approved accountant should always be your first port of call.


Why choose React Accountancy?

Here at React Accountancy, we provide trusted accountancy services to start-up, established and multi-national businesses across a diverse range of industries.

From the moment you get in touch, our approachable, friendly and professional team will go above and beyond to ensure that you receive the right advice, support and accountancy solutions for your business.

All of our team has years of experience in providing accountancy services that support your business including complex financial issues.


Get in touch today for further information about any of our services.

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