Entertainment
principle cannot be avoided), and
• ownership of the car passed direct to the employee at the outset (without any transfer of the property in it). COPYRIGHT © 2021 THE CHARTERED INSTITUTE OF PAYROLL PROFESSIONALS If ownership passes to the employee direct from the supplier then this condition is met and there can be no car benefit as this is not a company car but a car belonging to the employee. In addition, the employee must not be in excluded employment i.e. is not: • in lower paid employment (earning at a rate of less than £8,500 p.a.) • a director in lower paid employment with no interest in the company and is either: • a full-time working director, or • the company is non-profit making or established for charitable purposes only. ECOS schemes may also be called - ECO; ECOPs; or ECPs (Employees’ Car Plan). ENTERTAINMENT Corporate The provision of business entertainment at sporting or other public functions often including the use of private or corporate hospitality boxes or tents is a benefit-in-kind. HMRC will rarely allow employees to make a claim for tax relief for such taxable expenses - see http://www.hmrc.gov. uk/manuals/eimanual/eim21729.htm. Working Lunches It is very hard for entertaining (and that includes working lunches) that simply involves meeting with colleagues to satisfy HMRC’s rules on the expense being ‘wholly, exclusively and necessarily incurred in the performance of the employee’s duties’, which are enshrined in section 336 of ITEPA. Just because it is felt to be good for morale to have contact with other employees it carries with it an element of socialising, and so cannot meet the ‘exclusively’ part of the test. There are only two circumstances where HMRC accepts that the reimbursement of such expenses is not a taxable benefit, which are: • entertainment in the course of negotiating the renewal or alteration of a service contract, or • entertainment on the occasion of a ‘briefing visit’ when local staff have to stay late in order to meet a senior head office visitor, such as a director. EXEMPT MINOR BENEFITS A limited number of minor benefits are excluded from liability for tax, some of which are subject to an annual threshold. An employee may, subject to the stated maximum annual threshold, receive tax-free: • a long service award subject to a maximum value for each year of service, that the award marks at least 20 years’ service and that no other long service award has been made to the employee within the previous 10 years • a gift from a third party (not contractual) that is not cash or a non-cash voucher No printing, copying or reproduction permitted.
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