Are you feeling generous this year and wanting to give you customers and clients gifts, or even throw them a party? HMRC may not be as generous as you think. People often ask what tax allowance is available for Christmas parties. We thought this is a good time to remind you of what HMRC will allow you to put through your business for gifts and parties.
You can give a gift up to £50 per person a year if it is a business gift. It must have an obvious advertisement on the gift and you CAN NOT give food, alcohol or vouchers. Beware that if you go over the £50 you can’t claim any of the cost.
If you are a Limited Company, HMRC will allow you to put through the cost of parties for employees up to £150 per employee per year. If you go over the £150 limit the total amount is disallowed. Spouses and partners can be included if the costs per employee doesn’t go over £150. So if you have two employees plus partners you can spend £300. Sadly, if you only have directors in your company there is no allowance. In a similar vein, there is no similar allowance for self employed.
Beware that the VAT cannot be claimed. And you can never put through the cost of entertaining clients.
Bonuses and Vouchers
If you are feeling generous and want to give your staff a bonus or vouchers then make sure it is put through payroll. You can give a “trivial gift” such as a box of chocolates or a bottle of wine. More expensive gifts, such as hampers, need to be reported on P11D’s.
Don’t let HMRC spoil your party though. Give your gifts but just bear in mind that you may not be able to put them through your tax return. If you have any questions email firstname.lastname@example.org.