A taxpayer can’t deduct expenditure on business
entertaining and gifts. In the same way, capital allowances are not
due on assets used for business entertainment, (ICTA88/S577 or
ITTOIA05/S272).
Business entertainment includes hospitality of any kind
provided by a business, or by an employee. The person entertained
may be a tenant, potential tenant, landlord or any other person.
But an employer can deduct the cost of entertainment (such
as meals) provided to their employees as long as the provision for
them isn’t incidental to the entertainment of others.
For example, where an employee is provided with free meals,
the cost can be deducted. But where an employee takes (say) a
supplier to lunch at a restaurant and the employer meets the bill,
the whole cost is for business entertainment and can’t be
deducted.
Employees may be liable to tax on the benefit they get from
entertainment their employer provides and for which the employer
gets a deduction in computing their rental business profits.
Employers have an obligation to give details of benefits when
making their PAYE returns.
