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VAT reclaimable employee entertainment!

Employee entertainment doesn’t always score high on the priority list – especially when there are so many other things to pay for. But don’t write off the annual away day just yet! 

In times of recession activities involved in improving staff engagement, team building and boosting morale – in other words ‘employee entertainment’ can be one of the most important investment expenses a business can make. Even more so for companies that have not been able to offer staff pay rises for some time and where staff have faced unsettling times such as restructuring or redundancies. Once such processes are over consolidation of company objectives and activity to pep your staff up might be just what the doctor ordered. Plus, not all companies are aware that employee entertainment (including the employees family) is VAT reclaimable – meaning that those big employee events may not cost as much as first thought.

Not to be confused with business entertainment, employee entertainment centers solely around the employees involved.  Away days, team building days and staff Christmas parties are all recognised by the taxman as being an essential positive contribution to employee’s wellbeing.   Staff having a positive outlook on their employer is ultimately an asset of the business rather than being seen as a taxable personal benefit. 

However, there is a fine line between entertaining for business and entertaining employees. Entertaining those that do not work for the business, such as customers or prospective clients is otherwise known as business entertainment.

VAT for relatives and spouses of employees can also be reclaimed providing that the event is for employee entertainment such as morale boosting purposes – this means that employees can enjoy events with their families. “In hard times like this it is probably the biggest reason Whilton Mill have seen an increase in companies hosting family fun days throughout the year and providing entertainment options for all ages from bouncy castles and face painting through to exhilarating driving challenges on the 4x4 course or Karting. It’s a great way of the company providing something tangible and of benefit to the employee and their families without it being an item that they would have to declare as a benefit in kind. You couldn’t even buy a turkey for every member of your workforce without having to declare it as a benefit,” says Whilton Mill’s owner Roger Ashby.  “Employee entertainment on the other hand is not taxable and can be enjoyed at Whilton Mill in all seasons.”