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Are gratuities and service charges allowable?

Can you claim them as a business expense?

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Can't seem to find a reliable source online. Not really sure where to look. Are tips, gratuities and service charges in restaurants/other hospitality allowed as a business expense? My gut says yes, as the recipient has to declare it as income and pay tax on it.

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By David Ex
02nd Aug 2021 12:21

CluelessGoon wrote:

My gut says yes, as the recipient has to declare it as income and pay tax on it.

Don't think that's got anything to do with the tax treatment for the payer.

Technically, a gratuity ought not to be allowable as it's a "gift". In practice, I assume a reasonable amount wouldn't be disallowed.

A service charge must be allowable (if the underlying cost is) if it's added to the bill and not optional.

Different views here:

https://www.accountingweb.co.uk/any-answers/expense-claims-gratuities

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By I'msorryIhaven'taclue
02nd Aug 2021 15:51

Shouldn't this post be under Tax Tips?

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