As an employer covering the costs of your employees providing entertainment for clients, you have certain tax, National Insurance and reporting obligations. What’s included Entertainment can involve eating, drinking and other hospitality. Types of entertainment include: ‘business entertainment’ of clients - eg discussing a particular business project or forming or maintaining a business connection ‘non-business entertainment’ of clients - eg entertaining a business acquaintance for social reasons

What to report and pay

What to report and pay depends on the type of entertainment and who arranges and pays for it. Business entertainment of clients The same rules apply regardless of whether you: arrange and pay for the entertainment directly pay the supplier for entertainment arranged by your employee reimburse your employee’s entertainment costs You must report the cost on form P11D . You don’t have to deduct or pay any tax or National Insurance. Some expenses relating to the business entertainment of clients are covered by exemptions (which have replaced dispensations). This means you won’t have to include them in your end-of-year reports. Non-business entertainment – you arrange and pay You must: report the cost on form P11D pay Class 1A National Insurance on the value of the benefit Non-business entertainment – employee arranges, you pay You must: report the cost on form P11D add the full cost to the employee’s earnings and deduct Class 1 National Insurance (but not PAYE tax) through payroll Non-business entertainment – employee arranges and pays, you reimburse The amount you reimburse counts as earnings, so: add it to your employee’s other earnings deduct and pay PAYE tax and Class 1 National Insurance through payroll How to complete form P11D There’s an entertainment-related tick-box on form P11D. This is used by HMRC to determine whether or not your employee will be able to claim a tax deduction for the entertainment expenses you’ve provided. You don’t need to enter anything in the box if you’re completing the form for a charity or a tonnage tax company, but otherwise: put a tick in the box if the cost of the entertainment will be disallowed in your business’s tax calculations put a cross in the box if it won’t be disallowed Salary sacrifice arrangements If the cost of the entertainment is less than the amount of salary given up, report the salary amount instead. These rules don’t apply to arrangements made before 6 April 2017 - check when the rules will change .

Expenses and benefits: entertainment

Overview

As an employer covering the costs of your employees providing entertainment for clients, you have certain tax, National Insurance and reporting obligations.

What’s included

Entertainment can involve eating, drinking and other hospitality.

Types of entertainment include:

‘business entertainment’ of clients - eg discussing a particular business project or forming or maintaining a business connection
‘non-business entertainment’ of clients - eg entertaining a business acquaintance for social reasons

View a printable version of the whole guide

Expenses and benefits: entertainment

Overview

What’s included

Is this page useful?

Help us improve GOV.UK

Help us improve GOV.UK

Cookies on GOV.UK

Expenses and benefits: entertainment

Overview

What’s included

Related content

Is this page useful?

Help us improve GOV.UK

Help us improve GOV.UK