Wow, there are only 6 weeks left until Christmas! Amidst all the busyness and preparations you are doing at this time of year, we thought it might be useful to share some of the rules on what you can and can’t claim as Christmas expenses through your business.
There are three main areas to consider – Christmas gifts, Christmas parties and Christmas decorations.
Tis the season of giving. Unfortunately, most gifts you might want to give your franchisees are not allowable for tax relief. They will be classed as business entertaining. You can pay for them through your business, but it won’t reduce the amount of corporation tax you’ll have to pay. You also can’t claim the VAT back.
However, there are some exceptions –
- If, the gift is NOT food, drink, tobacco or a voucher.
- And, they contain a conspicuous (clear) advert e.g. branded items.
- And, the total of all gifts to that person during the accounting period is less than £50.
You can also give away free samples of any item that you provide as a product or service.
If you have employees, the rules are a bit different. In fact, gifts to employees can be claimed as long as the gift is entirely for the employee. But be careful because some gifts to employees are classed as a “benefit in kind”. This means the employee is taxed on the value of that gift. Basically, if the value is trivial e.g. a bottle of wine, then you aren’t required to report it to HMRC, but if it’s anything “substantial” or “cash-based” then it needs to be reported using a P11d form and the employee will pay tax on it.
Of course, there is nothing to stop you giving gifts personally rather than through the business. This will obviously avoid all these complications.
As with Christmas gifts, unfortunately, you cannot claim anything for Christmas parties held for your franchisees as it’s business entertainment.
However, if you have employees (who are on Payroll, NOT subcontractors), then the tax man suddenly becomes Santa and lets you claim £150 per employee. But make sure the receipt you are claiming for is not over that value.
Also, it’s important to be aware that this is allowed for only one event per year, and every employee must be invited.
Finally, as long as it’s in a place of work such as an office, and NOT in your home, then you can claim Christmas expenses for a Christmas tree and Christmas decorations. If you want to send Christmas cards to your customers (a great marketing tip), you can also claim Christmas cards as an expense under the category of advertising, stationery and printing costs.
Do you have any questions about whether things are or aren’t claimable through your business as Christmas expenses? Why not give us a call and we’ll be happy to talk you through any questions.
To find out more about how Paykeeper can help your business, please give us a call on 0330 111 66 33 or email firstname.lastname@example.org.