Guidance on business entertainment VAT
In order for business owners to reclaim their business entertainment VAT, it's worth knowing what business expenses and taxable benefits are available to you.
With any standard VAT, 20% is charged. In the case of Brexit and the COVID-19 pandemic, it's worth being aware that VAT charges change, either permanently or temporarily, depending on the category. With that being said, it's a good idea to monitor VAT charges, should they ever change. Business entertainment VAT changes have largely stayed the same in recent years.
There are certain conditions you need to meet to define something as ‘business entertainment.’
- The individual/s being entertained are not employees of the business.
- The entertainment is provided free of charge.
Some types of employees can be included in business entertainment reclaims, and some can’t. It largely depends on if your workforce is full-time, part-time, contractors, and in which country they’re working.
Plus, your business must be VAT-registered. Otherwise, your business won’t be able to reclaim any VAT whatsoever. To be VAT-registered, you need a taxable VAT turnover of over £85,000 in the UK.