Stocking fillers – 6 top tax tips to help you save over Christmas

Monopoly money at ChristmasHMRC offers some chocolate coins and some lumps of coal to businesses over the Christmas period. We’ve put our top tips together for you.

  • Christmas Parties

Good News – You can celebrate Christmas on the company. You can have a Christmas party as a business expense up to an average £150 per person. It must be open to all employees.

Good News – VAT is reclaimable, but only for the staff costs, not partners.

Bad News – The £150 amount includes invited partners and well as staff and is the total cost including any transport or accommodation provided.

Bad News – If the cost exceeds £150 per head the employee becomes will be liable to the whole amount as a taxable benefit.

Bad News – You can’t reclaim VAT if there are only Directors at the party (even if you don’t have any employees)

  • Gifts from customers

Good News – Your customers can show you how much they appreciate you. You can receive a gift from a client up to the value of approx £150 per year and this will not normally be considered a taxable benefit.

Bad news – Any more than than approx £150 and you’ll be liable to tax and NI.

  • Gifts to customers

Good News – You can send Christmas cards as a tax deductible expense. You can also send small promotional gifts of up to around £50.

Bad News – Gifts must carry a clear advertisment  for the business (e.g with branding or logo) and can’t be alcohol, food, drink, tobacco (unless they are your business) or vouchers. Non promotional gifts are classed as entertaining and are not tax deductible as an expense.

  • Gifts to employees

Good News – You can give your employees some Christmas spirit, but not too much. If you give them a gift of less than £50 e.g. a couple of bottles of wine or a box of chocolates then it falls under the Trivial Benefits in Kind Exemption which means no tax or NIC to pay.

Bad News – Larger gifts e.g. a case of wine may be viewed as a taxable benefit.

Bad News – If you give your employees as Christmas cash bonus it will be taxable along with the rest of their income. Vouchers are also taxable.

Bad News – Unfortunately gifts to employees are not tax deductible expense for the business.

  • Client entertaining

Bad news – Scrooge on this one I’m afraid. Even though it is Christmas, client entertaining is never a deductible expense.

  • Staying Healthy

Good News – You can give your employees a seasonal flu jab without it being considered a taxable benefit to them!

Image – Monopoly money at Christmas by Howard Lake