Questions and Answers

I am self employed - if I treat my staff to a evening out is this a BIK?

Q: I am self-employed and employ three staff. I decided to treat them to a Christmas dinner and few drinks before the Christmas break. Is this a BIK? Should I pay tax through my employees’ wages for this?

A: Entertainment expenditure for staff is not treated as a BIK and is fully tax deductible in your accounts. This means the cost of treating staff to a Christmas party can be used to reduce your tax bill, when preparing your annual accounts.

It should be noted client expenditure is not tax deductible. You will have to ensure that no clients were in attendance at paid for staff functions.

Date published 2 Mar 2015

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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