Making Sense of Christmas Gift Tax Rules
Published 2nd December 2024
Christmas is coming, and if you're considering buying gifts for your staff or customers, you'll want to know where you stand with tax. We're often asked about this at Hammond-Barr Accountants in Stevenage, so let's cut through the confusion.
Giving Gifts to Your Team
Good news - you can get tax relief on gifts to your staff. There's no limit on how much you can spend, but there's a catch: if any gift costs more than £50 (including delivery and VAT), your employee might have to pay tax on it.
The £50 Rule Made Simple
Think of £50 as your magic number. Go over it, and you'll need to pay National Insurance at 13.8% on the gift's value. Your team member might also face a tax bill - unless you're willing to cover it for them. And don't forget to count everything, including what you paid for delivery.
What About VAT?
This bit's straightforward: you can claim back the VAT on staff gifts. But if you do, you'll need to pay VAT when you give the gift. Unless, that is, you've spent less than £50 on that person in the past year - then you don't need to worry about it.
Buying for Customers and Suppliers
The rules are a bit different here. Usually, you can't claim tax relief on these gifts. One exception is if the gift costs less than £50 and shows your company's advertising. Just remember - food, drinks, and tobacco don't count, even with your logo.
Keeping It Simple
Here's what works well for many local businesses:
Keep your gifts under £50 to avoid the tax hassle
Save your receipts (a photo on your phone works well)
Write down who got what and when
If you're buying in bulk, work out the cost per person
Keeping It Simple
We can help you resolve this. We work with many businesses in Stevenage that want to spread Christmas cheer without getting tangled up in tax rules. Drop in and see us—we speak plain English, not accountant-speak.
Call us to discuss your Christmas plans. We're here to help you do something nice for your team and customers without receiving a surprise tax bill in the New Year.
Remember - you can be generous and tax-smart at the same time. Sometimes, it just takes a bit of planning.
Want to know more?
You can contact Hammond-Barr accountants on 01438 281281 or via email at [email protected].
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