YOUR CHRISTMAS GIFTING TAX GUIDE
It’s that festive time of year again, you’re feeling all warm & fuzzy inside and you want to give a Christmas gift to your clients or your staff…but the last thing you want is an unexpected tax surprise. Read on for all things tax when buying Christmas gifts…
Want to send a gift to your clients or suppliers to show your appreciation & gratitude?
If you’re a limited company, gifts of this nature are generally not tax-deductible (corporation tax or VAT) because they are considered “business entertaining".
The exception is:
Small gifts that contain obvious and clearly visible branding - (think notebooks/diaries, pens & mugs) that don’t exceed £50 per client per accounting year.
Sadly food & drink and gift vouchers do not count EVEN IF they contain your logo which excludes popular gifting options like wine, chocolates, or hampers.
Essentially, it is a trade-off between sending a client a promotional item which could be tax-deductible or the flexibility to send a gift of your choice without the company tax benefits.
Reminder: even if you decide on a non-deductible business gift, it’s more tax-efficient to put it through your limited company rather than paying out of your own pocket post-tax.
Want to treat your staff to a Christmas gift?
The good news for limited companies is that you can treat your employees to Christmas gifts costing less than £50 (including delivery & VAT) such as wine, chocolates, or hampers without it being treated as a taxable benefit. You can also gift store vouchers.
Anything costing a penny over £50 or Christmas cash bonuses would be taxable as earnings and need to go through your payroll or declared on a P11D.
And what about those all-important Christmas parties?
In addition to the gifts above, you can treat employees to a staff annual event such as a Christmas social as long as it costs less than £150 a head and is open to all employees.
There can be slightly different treatment for gifts & parties for directors of limited companies so tread carefully there. A cap of £300 could apply per tax year for directors in what is called a “close company” so check in with an accountant first if this would apply to you.
If you didn’t know about this, we have lots of other tax-saving nuggets too. Book in your Discovery Call with us today to see how we can help!
Disclaimer: The information contained in this blog is intended solely for general informational purposes only. While we have made every attempt to ensure that the information contained in this blog is correct, we are not responsible for any errors or omissions, or for the results obtained from the use of this information. Before making any decision or taking any action, you should consult a professional adviser.
