Spread a little Christmas cheer, save a few quid on tax!

It’s not really cold, nor is it particularly snowy, wet yes, but snowy definitely not in Manchester anyway!  However we are now in December which means Christmas isn’t far away. So I’m sure thoughts are of those christmas festivities.  The question is are you thinking of having an annual party for your employees or giving gifts to either your clients/customers or staff?  If so, are you aware of the tax implications as this could be an opportunity to unwrap a Christmas tax saving or two, whilst at the same time spreading a little Christmas cheer.

1.Staff Entertaining

Up to £150 per head can be spent on annual events (e.g. Christmas Party) and the whole amount can be offset against the profits of the business. Don’t forget the VAT as this can be reclaimed as well.

In working out the total spend you need to include all costs – its not just the meal and drinks but the transport to and from the venue (ie the taxis) as well.

The event isn’t limited to a Christmas Party – you could have a trip to a concert or a staff activity day.

Please remember to save the tax every event must be open to all employees  (That doesn’t mean they all have to attend…..oh no, just be invited!  🙂 ) to attend AND the total amount spent per head mustn’t exceed the £150.

Ps This is in marked contrast to non-staff entertaining (e.g. of customers/suppliers) where the cost is not an allowable cost for tax and the VAT cannot be reclaimed.  So why not spread a little Christmas cheer and benefit from a little Christmas tax saving.

 

  1. Gifts to customers or staff

The cost of giving gifts to customers is allowable for tax – so long as the following 3 criteria are all met: –

* The amount spent per customer is £50 or less

* The item in question is NOT alcohol / food / tobacco

* Your company name is conspicuous on the gift itself

 

Whilst its not as common as it used to be some businesses still like to give out bottles of wine. If that’s the case for you it makes sense to put the invoice though the business. You don’t get the tax relief for what was spent but at least it’s the business rather than you personally who pays for it.

You can though give ‘trivial’ gifts to your staff for which the cost is tax deductible! The HMRC handbook on this says…. “An employer may provide employees with a seasonal gift, such as a turkey, an ordinary bottle of wine or a box of chocolates at Christmas. All of these gifts are considered to be trivial and as such are not taxable”.

So go ahead and celebrate this festive season in style!   Spread a litttle happiness and cheer………

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