Allowable business expenses: entertaining clients - yes. Childcare - no. Discuss. Discuss

[Quodlibet]

So, it has occurred to me after seeing a thread in the Freelancer/Self Employed section, that child care is not an allowable business expense.

Which suddenly struck me as very strange, seeing as taking a client out to dinner, or to a lap-dancing club, is an allowable expense.

Are these things too different to be uncompareable? Or is it an Overton window issue?

Business entertaining is not allowable for tax!!

The VAT on it is reclaimable though..

I do think that child care should be allowable and that childcare vouchers should be available for sole trader/self employed.

I have my own company and I am employed by it so I pay myself childcare vouchers but I have to combine with DH to cover the cost of 3 days childcare.

I guess there are 2 separate issues then;

• what you can claim as a valid expense for tax,
  and

• expenses that businesses will permit.

What exactly are the rules tabbouleh? For example I am absolutely sure that I've seen people submit receipts for personal (SE) expenses which are for meals out with clients...I'm also sure that some firms run up enormous expenses on corporate entertaining, do they reclaim the VAT but essentially treat it as a business cost?

I don't know about paying yourself childcare vouchers either, how does that work?

Company is reimbursing the employees for meals out with clients etc but it is not allowable as a tax expense.

EG Company buys wigets for £10, sells them for £100, costs of running company £20, cost of client entertaining £5.

Profit is £100-£10-£20-£5 = £65

But tax has to be paid on £100-£10-£20 = £75

So tax bill is say 30% of £75.

So the cost of buing the widgets £10, running the company £20 are deducted before calulating tax but the cost of client entertaining is not.

My company is tabouleh ltd - tabouleh owns the shares and is the only director - tabouleh is an employee of tabouleh ltd. Tabouleh Ltd offers its employee taboleh childcare voucers.

The tax break on childcare vouchers is only available to employees not to people who have not set up a company and are operating as sole traders.

In general you can claim something as a business expense if it was wholly a business need.

Client entertaining doesn't fall under this as you still have to eat :)