Many business owners give their customers a little something at Christmas to say thank you each year.
The most common would be a bottle of wine or whisky. In this article, we will discuss options available to business owners and tax savings available.
When failing to claim for these expenses, the business ends up paying more tax and VAT than it could.
Gifts to Customers
The cost of giving gifts to customers is tax-deductible, provided that:
The amount spent per customer is £50 or less
The item is NOT alcohol/food/tobacco
Your company name is conspicuous on the gift itself
Gifts to Staff
The cost of giving gifts to staff IS allowable for tax – provided that:
The amount spent per employee is £50 or less
The item in question is NOT cash or vouchers
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.
Trivial Gifts To Company Directors
Up to £300 of gifts (‘trivial gifts’) can be bought each year for any director or company secretary of a limited company. Any family member (of a director/chief exec) who is an employee 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, provided that each gift:
cost you £50 or less to provide
not cash or a cash voucher
Whether it be admin, cleaning, packing in the warehouse or manning the shop, dropping leaflets through letterboxes, 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….
Paid a reasonable rate (& is at least the National Minimum Wage) for the work that they do
Paid just like any other employee
The cost of their wages IS tax-deductible. Staff Parties
Christmas parties are a great way of rewarding your team at the end of a theyear. The cost of Christmas parties IS tax-deductible (& VAT claimable) providing you stick to these strict rules. Those rules mean that the party:
Cannot cost more than £150 (incl. VAT) per person
Must be an annual event e.g. a Christmas party or summer party
Must be open to all of your employees (and must consist mostly of employees)
A business can also claim for the entertainment, room hire, taxi home and if needed, the overnight stay in a hotel.
You can have as many annual parties or events as you like BUT the total cost of them must NOT exceed £150 per person. If you spend more than this then NONE of the cost can be claimed.
Get Your Children Aged 13+ Onto The Payroll
Many family business owners get their children stuck 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 letterboxes, 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….
Paid a reasonable rate (& is at least the National Minimum Wage) for the work that they do
Paid just like any other employee
The cost of their wages IS tax-deductible.