Here is a very common question I am asked and Bob Harper of Crunchers has kindly answered it in his blog.
It goes like this......
Many people make the mistake of thinking lunches are tax deductible. Common examples include being away from the office and taking an employee or customer out for lunch to talk business. One of the reasons this issues causes confusion is because people are used to claiming expenses back, either as an employee or from their business.
If you run your own business you can claim the money back from your business. But this doesn’t mean your business will be able to claim the expenses for VAT or tax. The correct treatment depends on the type of expenses and why it was incurred.
Lunches are simple because the tax law is clear. A business can not claim the cost of lunches for VAT or tax. You can claim the money back from your business and the expenses may appear in your business accounts. But the VAT should not be claimed in your bookkeeping and when the tax is calculated at the year-end your Accountant will add back the expense.
The good news is that there is one exception - Christmas lunches. At the time of writing a business can claim the full cost up to £150 per head. And, it doesn’t have to be a Christmas lunch. You can have more than one event but be careful not to exceed the limit. If you go over by just £1 everyone will be taxed personally on the full amount. Not something you want to wake up to in the New Year!
To read more of Bob's Blogs click here
It goes like this......
Many people make the mistake of thinking lunches are tax deductible. Common examples include being away from the office and taking an employee or customer out for lunch to talk business. One of the reasons this issues causes confusion is because people are used to claiming expenses back, either as an employee or from their business.
If you run your own business you can claim the money back from your business. But this doesn’t mean your business will be able to claim the expenses for VAT or tax. The correct treatment depends on the type of expenses and why it was incurred.
Lunches are simple because the tax law is clear. A business can not claim the cost of lunches for VAT or tax. You can claim the money back from your business and the expenses may appear in your business accounts. But the VAT should not be claimed in your bookkeeping and when the tax is calculated at the year-end your Accountant will add back the expense.
The good news is that there is one exception - Christmas lunches. At the time of writing a business can claim the full cost up to £150 per head. And, it doesn’t have to be a Christmas lunch. You can have more than one event but be careful not to exceed the limit. If you go over by just £1 everyone will be taxed personally on the full amount. Not something you want to wake up to in the New Year!
To read more of Bob's Blogs click here
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