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HMRC internal manual

Employment Income Manual

Particular benefits: corporate hospitality: entertaining in a hospitality box or equivalent facility

When an employer provides hospitality to customers, guests and/or employees at a sporting or cultural venue, the employees are potentially subject to a benefit charge under Section 203(2) and Section 204 ITEPA 2003 (EIM21101) for themselves and any members of their family or household (EIM20504) who attend.The customers attending the event will be exempt from a tax charge if the conditions of Section 265 ITEPA are met, or if they are not employees.

The total cost to the employer will consist of the cost of hire for the box or equivalent facility (this may be a daily, seasonal or annual rate), plus additional costs of entertaining, such as food and drink. This total cost should be apportioned (EIM21200) between all those who attend, in order to arrive at a unit cost.


If a company hires a hospitality box at a football ground for a match day at a cost of £2,500, and incurs further costs of £500 on food and drink, the total cost is £3,000. If the event is attended by 10 customers and five employees, the unit cost is £200. The customers are exempt under Section 265. For the five employees this figure of £200 will be the amount of the potential benefit chargeable on each of them. Whether the employees are actually chargeable on this benefit depends if they are entitled to a deduction from the benefit, under Section 336 ITEPA 2003 (EIM32615), via Section 357 ITEPA 2003.

If three of the employees are sales staff required to attend as part of their employment duties, the provision of entertainment is likely to be incidental to the hospitality provided to the customers. If so it is classed as “business entertainment” under Section 577(5) ICTA 1988 (see BIM45000) and the cost should be added back in the employer’s tax computation and we would normally accept that the conditions for relief under Section 336 are met. Consequently there is no chargeable benefit for the sales staff. If the other two employees attend purely as a perk, they will not be entitled to relief under Section 336. They will be chargeable on a benefit based on the unit cost of £200.

It is common for an employer to hire a box for a season or a year, in which case the seasonal/annual cost of hire must be apportioned on the basis of the number of days of use, to arrive at a unit cost per day of use. Once a daily cost has been calculated, the same process as set out above should be followed to determine the amount of the benefit, if any, for those employees who use the facility. As well as use on match days, a box at a football ground may be used occasionally by the employer for business meetings away from the work premises. If so, these days should be included in the total number of days on which the box is used, to determine the average daily cost relative to the annual/seasonal hire charge. Employees are unlikely to be subject to a benefit charge for days spent solely attending a business meeting.

For information on entertainment expenses see EIM32565.