Occasionally we like to share information on other topics from top local experts.
These great tips are again thanks to Paul Woodcock, Director of top local accountants PJW Accounting based in Rugeley.
Today is no exception with yet another excellent LinkedIn & email newsletter post on this topic – “Getting a tax deduction for your Christmas Gifts”:
“I know it’s only October – but I feel it’s important to get in tthere early and remind you all that It’s coming up to that time of year again. So, I thought I’d try and focus your attention on the tax rules regarding Christmas gifts, just in case you were feeling generous and wanted to treat you’re customers/suppliers. Because, although it’s the season of goodwill to all men, don’t expect the Taxman to extend it to the business community if you fall foul of his rules.
So What are the rules?
As you know by now I’m a big fan of knowing what the rules are. The rules give you certainty and keep the Taxman in his place should he come enquiring into your affairs.
Fortunately the rules on getting a gift deductible are not that onerous and can be summarised thus:
- giving away free samples of your products is 100% deductible
- gifts carrying a conspicuous advertisement for the business are tax-deductible, but only up to £50 per person.
- Warning. Gifts of food, drink, tobacco and vouchers receive no tax deduction, even if less than £50.
What about the rules on VAT?
That £50 – does it include or exclude VAT? You’ll be pleased to know that it excludes VAT! So, you can buy up to £60 of gifts per person and still be under the limit.
What’s more – the Vatman will allow you to claim the VAT back on those gifts of food, drink and tobacco that the Taxman won’t let you claim as a deduction from your profits! Isn’t he nice!
To summarise: here’s a list of my Top Christmas Gift Tips:
Christmas Tip 1. Keep your purchases of gifts to under £60 (incl VAT) per person
Christmas Tip 2. Give away bottles of whisky, brandy and sherry and claim back the VAT on the purchase price. But don’t claim it as a deductible expense from your profits
Christmas Tip 3. The £50 (£60 gross) limit applies to the total value of gifts made to one person in a year. So you can give away a number of small gifts throughout the year. Just make sure that the total does not exceed £50/person for the year.
Christmas Tip 4. You don’t have to go to the expense of getting calendars specially printed or glasses/tankards engraved with your company logo. Why not just get some stickers printed with the company details and stick them on the gift.
Christmas Tip 5: Don’t forget that you also have a Christmas party to pay for. Make sure you keep the spend to below £150/head. If you do this the event will be entirely tax deductible. If you spend less than £150/head you can spend the unused element to entertain your staff later in the year. Just make sure you keep the annual spend below £150/head.
@TedTheMktgBear Hates Christmas! Tax
So although it’s the season of goodwill to all men and bears, don’t expect the Taxman to extend it to the business community if you fall foul of his rules….!”
If you want to talk to Paul on more top tax tips to help your business or subscribe to his newsletter then please contact him via LinkedIn, email him at firstname.lastname@example.org or call him on 01889 586431.
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