Entertainment ― clients

By Tolley in association with Philip Rutherford

The following Employment Tax guidance note by Tolley in association with Philip Rutherford provides comprehensive and up to date tax information covering:

  • Entertainment ― clients
  • Introduction
  • Client entertaining


Employers may regularly entertain clients, customers or suppliers. The consequences of such entertainment for both the third parties and any employees of the company are considered within this guidance note.

Entertainment means any provision of hospitality.

The content of HMRC guidance is summarised in EIM32565.

Client entertaining
The purpose of the entertainment

In order to qualify for any exemption or deduction, the entertainment should be business-related. This means that the purpose of the event should be to discuss business or a project, maintain connections, or expand business connections. If instead, for example, entertainment is provided as a form of reward to an employee or a client then it is taxable on the employee.

See the Example.

HMRC provides a useful flowchart to help decision-making in EIM32650A.

If the purpose of entertaining is not business-related, and is instead associated with reward or recognition, then there may be separate reporting and tax consequences. These are considered in the Third party benefits guidance note which also covers taxed award schemes.

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