It's a Gift!

The tax man doesn't let us get away with much, even at Christmas time, but one question we get asked a lot, at this time of year, is; "What can we actually claim for our Christmas entertaining?"

Most of these business owners will be looking to extend the Christmas spirit to both their staff and customers alike, so, what can we actually get away with at this festive time?

Staff Entertaining

Where a client provides a Christmas party or other social or sporting event, for their employees, which is open to employees only, the expenditure will be allowable.

Employees, for this purpose, include partners of employees. But beware. Although the expenditure is allowable as a tax deduction, if the bill totals more than £150 per head then then employees may have to pay tax on the entertainment received as a benefit in kind.

Entertaining Customers / Business Gifts

Business entertaining, including that of customers is, generally speaking, diasallowable, and has been for many years, regardless of the purpose of that expenditure.

Business gifts are also not allowed as a deduction against profits – they are treated the same way as entertaining expenditure.

In some instances, what appears to be a gift may actually be a part of the costs of a sale to a customer. For instance a bunch of flowers presented to a customer who has just purchased a new car would effectively have been paid for by the customer – it’s part of the cost of the car.

But there is an exception for gifts that are presented which contain a conspicuous advertisement for the business.

Provided the cumulative value given to any one person does not exceed £50 in any one accounting period then such gifts will be allowable for tax purposes. This would cover promotional goods such as pens or key-rings emblazoned with your name or logo.