Christmas Gifts - Our 3 Favourite Tax Saving Tips
Getting a Tax Deduction for your Christmas Gifts - What are the rules?
As you know by now we are big fans of knowing what the rules are. The rules give you certainty and keep the Taxman in his place should he come enquiring into your affairs.
Fortunately the rules on getting christmas gifts deductible are not that onerous and can be summarised thus:
1. Giving away free samples of your products is 100% deductible
2. Gifts carrying a conspicuous advertisement for the business are tax-deductible, but only up to £50 per person.
But a tax tip warning - Gifts of food, drink, tobacco and vouchers receive no tax deduction, even if less than £50.
What about the rules on VAT For Christmas Gifts?
That £50 for your Christmas Gifts - does it include or exclude VAT?
You'll be pleased to know that it excludes VAT! So, you can buy up to £60 of gifts per person and still be under the limit.
What's more - the Vatman will allow you to claim the VAT back on those gifts of food, drink and tobacco that the Taxman won't let you claim as a deduction from your profits!
Isn't the Vatman a nice Santa and not the Christmas Gifts Grinch!
Our 3 Top Tax Tips For Tax Allowable Christmas Gifts!
Here's a list of our top 3 Christmas Tips:
Christmas Tip 1. - Keep your purchases of gifts to under £60 (incl VAT) per person
Christmas Tip 2. - Give away bottles of whisky, brandy and sherry and claim back the VAT on the purchase price. But don't claim it as a deductible expense from your profits.
Christmas Tip 3. - You don’t have to go to the expense of getting calendars specially printed or glasses/tankards engraved with your company logo. Why not just get some stickers printed with the company details and stick them on the gift.
Here's a couple of bonus Christmas Gifts Tips:
Christmas Tip 4. - Don't forget that you also have a Christmas party to pay for. Make sure you keep the spend to below £150/head. If you do this the event will be entirely tax deductible. If you spend less than £150/head you can spend the unused element to entertain your staff later in the year. Just make sure you keep the annual spend below £150/head.
Christmas Tip 5. - The £50 (£60 gross) limit applies to the total value of gifts made to one person in a year. So you can give away a number of small gifts throughout the year. Just make sure that the total does not exceed £50/person for the year.
Our Christmas Gifts Call To Action
If you know of any other great allowable Christmas Gifts tips which the taxman will allow that can be shared with our readers then let us know via the comments or through LinkedIn.
Don’t be shy about claiming for “christmas gifts" (as above) from the tax man. It is good for you, your bottom line and your business!
The PJW Call To Action
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Remember - Don’t Leave a TIP with the Taxman!