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HMRC internal manual

Employment Income Manual

Particular benefits: third party entertainment: meaning of 'entertainment'

Section 265(5) ITEPA 2003

The word ‘entertainment’ has a very wide meaning. It is wider than hospitality since the legislation expressly says it includes hospitality of any kind. But it does not include a mere gift such as tickets to the theatre or to a football match. An event of that kind will not normally count as entertainment unless the third party provider, or his representative, is present to look after, or ‘entertain’, the guests. (Remember that Section 324 ITEPA 2003 deals with small gifts to employees from third parties (see EIM21715 onwards.)

The statutory exemption should thus be taken as covering:

  • any form of hospitality (dinners, parties, hospitality tents at sporting events, etc.)
  • events such as theatrical performances or sporting events, such as Wimbledon, where a host invites someone to accompany him as a guest.

Any costs associated with the entertainment, such as transport or overnight accommodation, are included in the exemption.

The provision of a holiday in the United Kingdom or abroad will sometimes count as ‘entertainment’ for the purposes of the exemption. This would apply, for example, if a representative of the provider was present throughout. In such cases, take special care to see that the exemption is not precluded by the ‘particular services’ condition in EIM21837.