Can my business pay for GIFTS to CUSTOMERS and is it TAX DEDUCTIBLE?
Posted on 15th Dec 2021
At Christmas lots of business owners give their customers a little something to say thank you each year. Have you ever wondered if this is tax deductible?
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: a. 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
2 GIFTS TO YOUR STAFF
The cost of giving gifts to staff Is tax deductible– as long as…
- The amount spent per employee is £50 or less
- The item in question is NOT cash or cash 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…
- cost you £50 or less to provide
- isn’t cash or a cash voucher (Gift vouchers are ok as long as they can’t readily be converted into cash)
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…
- 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)
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 (xmas, summer etc) as you like BUT the total cost of them all 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….
- 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.
If you think these changes might affect you and you’d like our opinion and help please get in touch straightaway. Call us on 0161 410 0020 or email email@example.com