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Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13862
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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Hi, I am a company director and all of my earnings are by PAYE.

Customer Question

Hi, I am a company director and all of my earnings are by PAYE. I travel and entertain customers purely for business. Should I pax tax on the value of travel and entertaining ? It is on my P11D but I have never included in my tax return as I thought as it was purely business related it i surely wouldn't pay income tax ???? Please advise.
Submitted: 3 years ago.
Category: Tax
Expert:  Sam replied 3 years ago.
Hi

Thanks for your question, I am Sam and I am one of the UK tax experts here on Just Answer.

The travelling and subsistence (if an overnight stay) can be claimed as an expense on your self assessment tax return as these expenses are incurred wholly and exclusively in the performance of your duties, but entertainment is not permitted (but you can claim for your meal/drink if it forms part of an overnight stay, or arises as the meeting required you to make a purchase, due to the environment it was in) but you can never claim for another individuals meal whether a current or new/potential client. See Booklet 480 (Page 74)
Book 490 Travel http://www.hmrc.gov.uk/helpsheets/490.pdf
Book 480 Expenses http://www.hmrc.gov.uk/guidance/480.pdf

The only time entertainment of any sort is permitted is when you are putting on an event for clients to come along to, and then a reasonable amount is permitted in line with the event.

I have added a link here for you which is the 490 booklet - which covers all topics regarding travel (Page 5+) and subsistence (Page 32+) and regarding entertainment


The fact its recorded on a P11d does mean that you have had the whole amount added to any salary/dividends or other income you declare on the self assessment return, so you certainly want to look into amending early year returns to claim the business elements (and this is just a claim on the employment part of the tax return, so this offsets some of the amounts as shown on the P11d)

Please do feel free to ask any follow up questions

Thanks

Sam
Customer: replied 3 years ago.
All of the entertainment is taking customers for meals etc purely to discuss business, so am I liable for income tax ?..
Expert:  Sam replied 3 years ago.
Hi

Thanks for your response

Entertainment is NEVER permitted as advised above, so yes you are liable to tax on that element of the costs shown on the P11d

Thanks

Sam
Expert:  Sam replied 3 years ago.
HI Chris

Let me know if you end any further advise on amending your self assessment tax returns for the earlier tax years.

Thanks

Sam

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