No large Christmas parties this year, but we may still want to tell our staff and clients that we are thinking of them at Christmas. Tax shouldn’t be the main reason you chose your gift, but in these tough times, getting tax relief on the cost will help!
Your gifts will only get tax relief for your business, and you can only reclaim the VAT if the gift is:
- NOT food, drink, tobacco or a voucher AND
- Carry a conspicuous advert for your business AND
- The cost of that gift, and any other to that person in the year is under £50
A “conspicuous advert” means that your logo etc should be on the gift itself and not just on the packaging, which also makes it harder!
Whether you can get the tax relief or not on your Christmas gifts, why not support a local business this year that really needs your help. Many local businesses are now doing vouchers if they are not currently open or delivering products if you are not able to visit in person. Your staff/clients will appreciate the thought that has gone into supporting a local business in these tough times, and local facebook groups are full of small businesses advertising some lovely festive gifts.
You could also consider a donation to a local charity or business supporting those who are really going to struggle over the festive period. Charity donations through your limited company are tax efficient and another way to help those in need this Christmas.
What about the Xmas party?
Even though large gathering are out of the question, depending what the rules are in December, it may be possible for small companies to go out for a Christmas meal to a local restaurant, and they will be in need of our support!
Most people are aware about the rules for the staff Xmas party. For a limited company, the cost for the annual party is allowable for tax as long as it is under £150 per head (all staff have to be invited but the cost is per head – “plus ones” can also be invited.) So if you can do this and stay within the rules, it may still be possible to spread a little Christmas cheer amongst your staff!