Can i claim back an entertainment allowance as a sole trader?

Answer 1

6 answers above - only one correct so far.

As a sole trader you are entitled to claim a tax deduction for anything that is spent 'wholly and exclusively for the purposes of the trade'. You'd think that this would include entertaining which is wholly to try to win new clients.

Whilst it is absolutely fine to spend money on entertaining and to record it in your profit and loss account (not the balance sheet per the answer further up!!), the tax legislation says that this is specifically not tax deductible, even though its for the trade.

This means that you cannot get tax relief on entertaining customers, possible customers, bank manager etc.

One piece of good news - you can get tax relief on employee entertaining, ie rewarding any employees with a meal, drinks, night out. However, as a sole trader you are not an employee so this is only for legitimate employees whom you pay and operate PAYE/NIC for.

Hope this helps!

Answer 2

You do not use your room 85% for business. That would be 20½ hours per day. There are two types of cost: fixed costs, and running costs. You can claim any cost that is incurred solely for your business. That means if you are the sole occupier of the room when you are working, you can claim the costs. First, you need to work out the cost per room. Dividing the costs by the number of rooms is one way of doing that. Fixed costs are then further apportioned based on business use alone. If you work 3 hours a day, that would be 3/24. Fixed costs include rent, council tax, insurances etc. Everything you need to pay to keep the roof over your head. Running costs are incurred only whilst a room is being used. So if you use a room for 10 hours a day, the business proportion would be 3/10. Its best to put aside a room solely for business. Then you could simply claim claim the whole cost of that room without further apportionment.

Answer 3

Flick W's answer is the most complete and correct for UK tax purposes. One further point though, is that staff entertaining also needs to be reported as a benefit in kind on the relevant employees' P11Ds, so although it is deductible for the employer it does get taxed on them. There is an exception for annual parties or similar functions (to which all staff must be invited) on costs up to a specified limit (used to be £250 per person per year, I know it has since increased but I can't remember the new limit).

Answer 4

So, i think you are looking to off-set it for tax ?

Yes, you can. Keep reciepts and write the reason and people who were with you on it. Put it down as entertainment expense on your company balance sheet. Its common for accounts to handle this for you.

If you draw a salary then you can claim back and it would be off-set against the company tax, not your personal allowance.

Answer 5

1

Answer 6

No, you can't.

Of course it is a legitimate business expense and should be shown in your profit and loss account but it will not be an allowable deduction for income tax purposes.

Entertaining foreign clients used to be allowed but that was stopped some time ago.

Answer 7

Entertainment is not a claimable expense on a tax return. Entertainment for employees is limited.

Answer 8

Only if you are entertaining foreign clients, in the hope that you can export your skills or products I am afraid.

Answer 9

I dont seem to understand the question. What has shoes/soles got to do with entertainment!

Answer 10

Yes, it should be used to entrtain external clients tho and obviously not yourself!