11 Dec

Tax Breaks and Christmas Gifts

Who doesn’t like to get a gift at Christmas? Or what about two gifts – now you’re talking! Did you know that there are tax breaks when a business gives gifts? Businesses in the know will deduct the cost of gift-giving against their profits and pay lower tax. But how can you make sure that you get the job done systematically? The easiest way to organise this is to split the gifts into two categories: those for the staff, and those for the clients. 

Gifts for Employees 

In general, if an employer gives an employee a gift, the employee is taxed on it. Some present! But employers who know the guidelines will offset the cost against their business profits as well as making the gift tax-free for the recipient. It is just a question of taking care of the small stuff, as well as, seeing the bigger picture. This is something we’re proud to do at Mazuma.  

Qualifying Gifts to Employees  

  • Must not be cash, cheque or a cash voucher – but can be a voucher that you exchange for goods, eg coffees or cinema tickets 
  • Must cost the business less than £50 per employee gift – after meeting this requirement, the company could give the employee multiple gift except… 
  • When a company director is also an employee. In that case, the limit is £300 worth in one tax year 
  • Cannot be in return for workers giving up salary or as a reward for specific services which are simply part of their jobs 

So now you know what is allowed, how do you know what to give? How about… 

A nice bottle of wine, chocolates, Christmas food, a hamper, or a restaurant voucher? They will enjoy the treat and know that they’re appreciated. But what if you want to give something that is not recognised under the guidelines? Mazuma can help you to deal with this option as it may involve you paying HMRC for your employee’s tax on the gift. 

Gifts for Clients 

Businesses can claim deductions on gifts to clients as long as they follow the guidelines, but the deductions are not quite as generous as those for employee gifting. Mazuma has a team of experts on hand and online to simplify the process, or simply read on for a summary:  

Qualifying Gifts to Clients  

  • Must be something that the company trades in. For example, a clothing business could gift some gloves to its client, but not a box of chocolates as confectionary is not their trade 
  • Must have a clear advertisement for the business and not be tobacco, food, drink or vouchers 
  • Must cost under £50 per client 

Small Businesses and Sole Traders 

Mazuma can help with all of your accountancy needs – festive or otherwise. We provide a hassle-free, online accounting service. We make everything easy, taking the stress away from you, allowing you to focus on business. Everyone needs an accountant and we’re here to simplify the process and help you. 

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