Christmas gifts for your clients and employees and tax implications

Christmas is an ideal time to express your gratitude to your clients and employees. A simple gift or gesture can go a long way. But does this need to come out of your own pocket or can you claim the gifts as expenses?

Client Gifts and Tax

The guidance from HMRC is that you can claim for gifts worth up to £50 but the gift must be business related, ie a corporate branded diary or calendar for example, something which is advertising your business. The gift cannot be alcohol, food, tobacco, cash or vouchers. The only exception to this is if it’s a sample of something which your business produces. 

If the gift exceeds the £50 threshold HMRC will refuse the full amount not just the amount exceeding the £50 limit. 

Employee Gifts and Tax

Gifts to your employees are taxable but HMRC will allow you to spend £150 per employee on a Christmas party. Of course Christmas gatherings are out of the question this year, but why not have a virtual party? HMRC confirms that a party can take place at any time of year and be split into multiple events as long as you do not exceed the value of £150 per employee per year. Just like with the client gifts if you exceed the £150 limit then the entire amount will be taxable. 

Virtual Events

Due to the current COVID situation it’s going to be hard on businesses and employees to not celebrate Christmas as a team. Christmas parties are a great way for everyone to get to know each other better and to seal the team bond. Don’t let the current climate get in your way, throw a virtual party for your team to express your gratitude. You can still supply the food and drink, they will just need to enjoy it from the comfort of their own home. A Zoom call allows up to 100 participants so there’s nothing stopping you! Get the festive tunes on, schedule in some fun team games and quizzes and party away!

If you’re feeling generous and you’re not too concerned about offsetting the tax on the gifts then here are a few ideas:

Gift ideas

How about a small gesture like an employee appreciation notebook from Amazon, let your team know how much they mean to you. Why not add some personalisation and add your logo, that way you can offset your tax as it’s classed as advertising merchandise.

At only £5.95 even if you have a large team, it won’t break the bank!

If you’re feeling a little more indulgent why not check out the great range of chocolate gifts at Hotel Chocolat, from chocolate lollipops to Christmas hampers, they have it all. Who could resist their Classic Christmas Sleekster?

M&S have a limited edition Christmas Prosecco which is presented in a lovely Gold bottle, and priced at £10 it won’t over stretch those purse strings! It can be purchased online with Ocado or directly from M&S shops.

For our Accountancy and Bookkeeping friends, take a look at these great pencils, which can be purchased from Amazon.

We hope you have got some inspiration for your Christmas shopping now, happy shopping, and have an amazing Christmas!

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