Tax And Christmas Gifts
Neil Bromage has run his own small business and is a freelance business writer working on a range of newspapers including The Times, Sunday Times, Telegraph and Financial Mail on Sunday. This book is based on a wide range of columns and Q&As written and answered by Neil for Business Link over a number of years. He is based near Preston, Lancs.
Staff gifts. You can be as generous as you wish with your staff to thank them for their hard work over the year, but these gifts are not tax deductible. Your staff, however, can accept gifts up to the value of £150 without attracting benefit tax. Staff parties will not be taxed as a benefit in kind, providing the cost does not exceed £75 per head.
Gifts for customers/suppliers. You may feel you want to thank a particularly loyal customer by giving a gift-wrapped bottle of ‘something’ but this is not a tax-allowable expense. If you want to thank a member of a firm’s staff with a gift, take care; the company may have a policy of not permitting staff to accept gifts over a certain value. Be careful also not to upset anyone by singling out the person you have had more dealings with; often the whole back-office support team is involved in providing that company’s service.
Gifts as PR. Christmas gifts that advertise your company, provided they are of reasonable cost (i.e., a few pounds each) are a tax-allowable expense. For instance, items printed with your company name, logo and message promote your business and are a lasting advertisement. Diaries and calendars, pens, etc. are all tried and tested ways of combining a Christmas gift and lasting PR for your business. They are also popular with the recipients. A well-designed and original Christmas card still makes a good impression and is especially appropriate if you are a design, marketing or PR company.
In order for your gifts to be tax-allowable expenses they must be permanent or semi-permanent goods (not food, drink or tobacco), bear a ‘conspicuous advert’ for your business and not amount to more than £50 to the same person in the same year.