Christmas - A time for giving
It is widely known that in general no deduction is allowed in computing taxable profits for expenses incurred in providing entertainment and gifts. However, this Christmas, you may wish to take advantage of the various tax concessions that are available which are summarised below:
The Office Party
Unfortunately for employers, there is no tax benefit against which you can offset the expense of your annual Christmas party or similar staff function. The limit of expenditure is £150 per head, but it is worth remembering that you can spend up to £300 per employee as the per head definition extends to the employees’ partners. These limits are important because if they are exceeded the full amount becomes taxable on the employee. The limit is an annual one, so a similar event could be held at a different time of the year as long as the limit is not exceeded during the year. The limit includes all associated costs such as coach hire and VAT. Beware – if the party is going to cost more than £150 per head, staff should contribute the difference, otherwise the Revenue will assess the whole amount as a benefit on each individual employee.
The VAT incurred can be claimed back on the proportion that relates to the staff, i.e. not in respect of their partners.
Staff Presents
Gifts to employees, such as a bottle of wine or a hamper, are non-assessable on the employee if they are classed as trivial. Unfortunately it is unclear as to what is termed trivial, except that it should be viewed as trivial to the employee as well as to the employer.
Gifts of cash to employees will always be assessable.
Gifts to suppliers and customers
Small gifts can be made by businesses as long as they include a conspicuous advertisement for the trader and do not consist of food, drink, tobacco or a token or voucher exchangeable for goods and the cost to the trader of all such gifts to the same person does not exceed £50.
If you have any doubt about what you can, or cannot, give this Christmas then please get in touch. We are always pleased to offer advice, whether you are a client or not. And a final word – from everyone here at Baker Chapman & Bussey…a very happy Christmas.
