Don’t Get Caught out with the Taxman over Christmas Gifts to Staff and Customers

24th November 2011

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Gifts to customers of the products or services you normally sell are tax allowable, as long as you are not in the food business
Small promotional gifts are also treated as tax allowable if they cost less than £50 each and carry a clear advertisement for your business
Remember, there is no tax relief for the cost of food, drink, tobacco and gift tokens of any value
The £50 limit is for the whole year not just per gift
VAT can be reclaimed on small gifts to a value of £50 each, including those comprising of tobacco and alcohol
Gifts to your staff are tax allowable for your business, but could be taxable for the employee. The taxman considers some small items to be trivial benefits which can be given as tax free
Trivial items can include seasonal gifts such as a turkey, ordinary wine, or chocolates

If the gift extends beyond one of the items mentioned, you will need to consider the contents and costs before being able to determine if the benefit is trivial. Use your judgement but remember you will need to justify your decision to HMRC.

This summary is based on our understanding of HMRC guidelines and may not apply to your circumstances. Each case must stand scrutiny by HMRC who have the final say in what is acceptable.

Contact us on 01773 747990 for specific advice relating to your personal situation.

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