Christmas is coming and we’re sure you’ve already started shopping for presents. But, can you ask the taxman to help buy any of them? Yes, you can – presents for your customers, team members, and even for you and your family can qualify for tax relief.

Amy Turner has recorded a video on this. She’s wearing her Christmas jumper but we couldn’t persuade her to don a Santa hat! Watch her video or read all about it below.

The rule that comes in to play is one on “trivial benefits”. These can usually be provided by a business to an employee, with the business able to claim tax relief and the employee not needing to pay any tax on the gift.

Gifts to customers

As a general rule, you can’t claim tax relief on gifts as they’re classed as “Entertaining”, which isn’t allowable for tax purposes. However, there is an exception if the gift ticks these three boxes:

  1. The gift has a conspicuous advert for your business
  2. The gift isn’t food, drink, tobacco or vouchers
  3. You don’t give gifts worth more than £50 per person per year

Which seems to take out all the good stuff!

Gifts to staff

You can claim tax relief on gifts to staff as long as they’re deemed to be “trivial benefits”. There are a lot of rules around this but, at its simplest, the gifts:

  • Can’t be cash or cash vouchers
  • Must be worth less than £50 per person
  • Must not be a reward for doing part of their job or for good work – eg it’s for Christmas, not because they did some overtime

The good news is that you can include food or drink – a Christmas turkey or a bottle of wine is absolutely fine.

Gifts to you and your family

The really good news is that, if you’re a Director of a Limited Company and you or your family members are employees, you’re eligible for up to £300 per year…..each.

Each individual gift must be worth less than £50 and is subject to the same rules as gifts to staff, However, you can have a number of gifts during the year, adding up to £300 per person. Your business gets tax relief and you pay not tax personally.

This extends to:

  • Directors
  • Office holders (eg the Company Secretary)
  • Family members of Directors and Office holders…..as long as they’re an employee of the company

You do need to keep a record of the gifts to each person, to prove you’re sticking to the rules.

It’s also worth noting that this is all in addition to the Christmas party. Therefore, go and buy yourself a present. You deserve it!

Any questions?

If you’d like a meeting or a Skype call to discuss this, please get in touch with your favourite Liverpool accountant