Income and Corporation Taxes Act 1988

577 Business entertaining expenses. U.K.

(1) M1 Subject to the provisions of this section—

(a) no deduction shall be made in computing [F1 profits] chargeable to [F2 corporation tax] under F3 . . . Schedule D for any expenses incurred in providing business entertainment, and such expenses—

[F4 (i)] shall not be included in computing any expenses of management in respect of which relief may be given under [F5 the Corporation Tax Acts]; [F6 and

(ii) shall not be brought into account under section 76 as expenses payable].[F7 F8 . . . ]

(b) F8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c) F9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) F10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) The expenses to which paragraph (a) of subsection (1) above applies include, in the case of [F11 any company], any sums paid [F12 by the company] to, or on behalf of, or placed [F12 by the company] at the disposal of [F13 an employee of the company] exclusively for the purpose of defraying expenses incurred or to be incurred by him in providing business entertainment F14 . . . .

(4) F10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) For the purposes of this section “business entertainment” means entertainment (including hospitality of any kind) provided by [F15 a company], or by [F16 an employee of the company], in connection with a trade carried on by [F17 the company], but does not include anything provided by [F18 the company] for bona fide [F19 employees of the company] unless its provision for them is incidental to its provision also for others.

(6) F10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) In this section—

(a) any reference to expenses incurred in F20 . . . providing entertainment includes a reference to expenses incurred in F20 . . . providing anything incidental thereto;

(b) references to a trade include references to any business [F21 or profession]; and

(c) references to [F22 a company's employees] are references to persons employed by [F23 the company], directors of [F24 the company] or persons engaged in the management of [F24 the company] being for this purpose deemed to be persons employed by it.

(8) This section shall apply in relation to the provision of a gift as it applies in relation to the provision of entertainment, except that it shall not by virtue of this subsection apply in relation to the provision for any person of a gift consisting of an article incorporating a conspicuous advertisement for the donor, being an article—

(a) which is not food, drink, tobacco or a token or voucher exchangeable for goods; and

(b) the cost of which to the donor, taken together with the cost to [F25 the donor] of any other such articles given by [F25 the donor] to that person in the same [F26 accounting period], does not exceed [F27 £50].

[F28 (8A) F29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(9) M2 Subsection (8) above shall not preclude the deduction, in computing [F1 profits] under F3 . . . Case I or II of Schedule D, of expenditure incurred in making a gift to a body of persons or trust established for charitable purposes only; and for the purposes of this subsection the Historic Buildings and Monuments Commission for England and the Trustees of the National Heritage Memorial Fund shall each be treated as such a body of persons.

(10) M3 Nothing in this section shall be taken as precluding the deduction of expenses incurred in F30 . . . the provision by [F31 any company] of anything which it is [F32 its trade] to provide, and which is provided [F33 by the company] in the ordinary course of that trade for payment or, with the object of advertising to the public generally, gratuitously.

Textual Amendments

F1 Words in s. 577(1)(a)(9) substituted (31.7.1998) by Finance Act 1998 (c. 36), s. 46(3)(a), Sch. 7 para. 1

F2 Words in s. 577(1)(a) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 235(2)(a) (with Sch. 2)

F3 Words in s. 577(1)(9) repealed (with effect in accordance with s. 38(2)(3) of the repealing Act) by Finance Act 1998 (c. 36), Sch. 27 Pt. 3(4), Note

F4 Words in s. 577(1)(a) re-numbered as s. 577(1)(a)(i) (28.9.2004 with effect in accordance with art. 1(2) of the amending S.I.) by virtue of The Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendment of Enactments) Order 2004 (S.I. 2004/2310), art. 2, Sch. para. 23(2)(a)

F5 Words in s. 577(1)(a)(i) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 235(2)(b) (with Sch. 2)

F6 S. 577(1)(a)(ii) and preceding word inserted (28.9.2004 with effect in accordance with art. 1(2) of the amending S.I.) by The Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendment of Enactments) Order 2004 (S.I. 2004/2310), art. 2, Sch. para. 23(2)(b)

F7 Word at the end of s. 577(1)(a) inserted (with effect in accordance with s. 579 of the amending Act) by Capital Allowances Act 2001 (c. 2), Sch. 2 para. 51(1)(a)

F8 S. 577(1)(b) and preceding word repealed (6.4.2003 with effect in accordance with s. 723(1) of the repealing Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 6 para. 62(2), Sch. 8 Pt. 1 (with Sch. 7)

F9 S. 577(1)(c) and preceding word repealed (with effect in accordance with s. 579 of the repealing Act) by Capital Allowances Act 2001 (c. 2), Sch. 2 para. 51(1)(b), Sch. 4

F10 S. 577(2)(4)(6) repealed (with effect in accordance with s. 72(1) of the repealing Act) by Finance Act 1988 (c. 39), Sch 14 Pt. 4

F11 Words in s. 577(3) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 235(3)(a) (with Sch. 2)

F12 Words in s. 577(3) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 235(3)(b) (with Sch. 2)

F13 Words in s. 577(3) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 235(3)(c) (with Sch. 2)

F14 Words in s. 577(3) repealed (6.4.2003 with effect in accordance with s. 723(1) of the repealing Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 6 para. 62(3), Sch. 8 Pt. 1 (with Sch. 7)

F15 Words in s. 577(5) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 235(4)(a) (with Sch. 2)

F16 Words in s. 577(5) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 235(4)(b) (with Sch. 2)

F17 Words in s. 577(5) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 235(4)(c) (with Sch. 2)

F18 Words in s. 577(5) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 235(4)(d) (with Sch. 2)

F19 Words in s. 577(5) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 235(4)(e) (with Sch. 2)

F20 Words in s. 577(7)(a) repealed (with effect in accordance with s. 579 of the repealing Act) by Capital Allowances Act 2001 (c. 2), Sch. 2 para. 51(2), Sch. 4

F21 Words in s. 577(7)(b) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 235(5)(a) (with Sch. 2)

F22 Words in s. 577(7)(c) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 235(5)(b)(i) (with Sch. 2)

F23 Words in s. 577(7)(c) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 235(5)(b)(ii) (with Sch. 2)

F24 Words in s. 577(7)(c) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 235(5)(b)(iii) (with Sch. 2)

F25 Words in s. 577(8)(b) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 235(6)(a) (with Sch. 2)

F26 Words in s. 577(8)(b) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 235(6)(b) (with Sch. 2)

F27 Words in s. 577(8)(b) substituted (with application in accordance with s. 73(4) of the amending Act) by Finance Act 2001 (c. 9), s. 73(2)(b)

F28 S. 577(8A) inserted (with application in accordance with s. 73(4) of the amending Act) by Finance Act 2001 (c. 9), s. 73(3)

F29 S. 577(8A) repealed (6.4.2005 with effect in accordance with s. 883(1) of the repealing Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 235(7), Sch. 3 (with Sch. 2)

F30 Words in s. 577(10) repealed (with effect in accordance with s. 579 of the repealing Act) by Capital Allowances Act 2001 (c. 2), Sch. 2 para. 51(3), Sch. 4

F31 Words in s. 577(10) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 235(8)(a) (with Sch. 2)

F32 Words in s. 577(10) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 235(8)(b) (with Sch. 2)

F33 Words in s. 577(10) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 235(8)(c) (with Sch. 2)

Marginal Citations

M1 Source-1970 s.411(1)-(8); 1985 s.43; 1971 s.50(8)

M2 Source-1980 s.54, 118(3); 1983 s.46(3)(b)

M3 Source-1970 s.411(9)