11. Entertaining

See also:

11.4 Non-business and social entertainment

(a) Annual parties and similar functions

Certain events or functions for staff and others can be considered non-taxable even where their primary purpose is not business but social entertaining. The following conditions must be met.

Conditions for non-taxable social entertaining:

  • The event is regular in nature and not a one-off; and
  • The event is open to staff generally within the department and not limited to specific groups; and
  • The total cost of all such events in any one tax year does not exceed £150 per head.

This means that annual events, such as Christmas or Summer parties, or events that occur with similar regularity (e.g. every term) can be considered as tax exempt as long as they fulfil the other two criteria. One-off events cannot be considered as exempt.

The openness of an event is equally important and where it is limited to a research group, team, sub-department or other unit of a department, rather than the whole department, then it will not be possible to consider it as exempt.

Taxable events that do not meet all of the above conditions for exemption must be treated as taxable entertaining.

(b) Staff entertaining

Departments may, at the discretion of the Head of Department (or nominated deputies), provide entertaining or hospitality to staff (or others) that does not meet all of the defined criteria or conditions for tax exemption. In such instances there will be an additional tax liability on top of the actual expenditure on the event. Examples might include:

Examples of taxable non-business entertaining:

  • Christmas meal or summer party not open to the whole department;
  • An event to mark the completion of a project or activity that is only open to the participants in that project or activity;
  • ‘Thank you’ meals or events for teams or individuals;
  • Retirement meals or events.

In all instances these events must be treated as taxable entertaining.

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