Presents for staffCAN MY BUSINESS PAY FOR GIFTS TO CUSTOMERS (& anything else this Christmas)?

At Christmas lots of business owners give their customers a little something to say thank you each year. A bottle of wine or whisky are probably the most common. The question I get asked is……can the business pay for it?

 

In this article I’ll answer that question AND highlight other tax savings …that business owners fail to claim for.

And by not claiming the business ends up paying more tax and VAT than they could…

1 GIFTS TO CUSTOMERS

The cost of giving gifts to customers IS tax deductible, providing you stick to these 3 things:

  1. The amount spent per customer is £50 or less
  2. The item is NOT alcohol / food / tobacco
  3. Your company name is conspicuous on the gift itself

 

2 GIFTS TO YOUR STAFF

The cost of giving gifts to staff IS allowable for tax – as long as…

  1. The amount spent per employee is £50 or less
  2. The item in question is NOT cash or vouchers

 

3 TRIVIAL GIFTS TO COMPANY DIRECTORS

Did you know that up to £300 of gifts (HMRC calls them ‘trivial gifts’) can be bought each year for any director or company secretary of a limited company?

Amazingly, any family member (of a director/chief exec) who is an employee (i.e. on the payroll) of the same limited company can ALSO get £300 of trivial gifts each year!

The cost of any trivial gifts you buy ARE tax deductible….as long as each gift…

  1. cost you £50 or less to provide
  2. isn’t cash or a cash voucher

 

4 TRIVIAL GIFTS TO STAFF

An employer may want to give a seasonal gift to their employees such as a turkey, an ordinary bottle of wine or a box of chocolates at Christmas.

The cost of trivial gifts ARE tax deductible.

 

5 STAFF PARTIES (Incl. Christmas Party)

Christmas parties are a great way of rewarding your team at the end of a year.

The cost of Christmas parties IS tax deductible (& VAT claimable) providing you stick to these strict rules. Those rules mean that the party…

  1. Cannot cost more than £150 (incl. VAT) per person
  2. Must be an annual event e.g. a Christmas party or summer party
  3. Must be open to all of your employees (and must consist mostly of employees)

In addition to the meal and drinks a business can also claim for the entertainment, room hire, taxi home and, if needed, the overnight stay in a hotel.

And finally…you can have as many annual parties or events as you like BUT the total cost of them must NOT exceed £150 per person because if you spend more than this then NONE of the cost can be claimed. Ouch.

 

6 GET YOUR LITTLE HELPERS ONTO THE PAYROLL

Many family business owners get their children stuck in around the office – especially in the run-up to events and seasonal occasions.

And there are countless jobs that need to be done!

Whether it be admin, cleaning, packing in the warehouse or manning the shop, dropping leaflets through letter boxes, an extra pair of hands is always welcome.

If you’ve got a little helper aged 13 or over then make sure they’re on the payroll! Just remember they should be….

  1. Paid a reasonable rate (& is at least the National Minimum Wage) for the work that they do
  2. Paid just like any other employee

The cost of their wages IS tax deductible.

 

 

It is important that you take professional advice before making any decisions based on the information that you learnt here. While every effort has been made to make sure it is accurate it cannot be precisely tailored to your personal circumstances. This article is for general information only and no action should be taken, or refrained from, as a result of this information.  Professional advice should be taken based on specific circumstances in each individual case.  Whilst we endeavour to ensure that the information contained in the article is correct, no liability  will be accepted by KMA Accountancy which is a trading name of Kim Marlor Associates Ltd or damages of any kind arising from the contents of this communication, or for any action, inaction  or decision taken as a result of using any such information.

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