Christmas is fast approaching, and many business owners think about treating their staff and customers at this time of year. But there are rules around this because if it involves money, HMRC is going to want its say ...
If you're treating your staff and customers this christmas be careful how much you spend!
When it comes to gifting, there are two sides to taxation. For the giver and for the receiver. For you (the giver) it is vital that you don't go crazy with your generosity or you could be hit with a National Insurance and Income Tax bill.
"The basic limit is £50, including delivery charges!
If your gift is worth more than that then it will be taxed as a perk for the employee. They will have to pay Income Tax (unless you agree to pay it on their behalf) and you will have to pay Class 1A National Insurance. So, a £60 gift would end up actually costing £85 instead. And it has to be a proper gift to get the exemption, just giving them cash doesn't count.
For clients, again the £50 gift limit applies, and it must not be part of a series of gifts to the same person within the same accounting period. Sadly, you can't give them tobacco, food or drink because the exemption doesn't apply to them.
Remember that you must account for VAT on gifts. The rules on VAT for client gifts is the same as those for employees. You must account for VAT should gifts exceed the £50 limit!
To HMRC, Christmas is just another day. They don't consider it to be a festive time so you have to be careful with gift-giving and ensure you account for every penny.
Otherwise, you may face the unwanted attention of the taxman when you file your next returns.
Until next time ...
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more, it may be a great idea to give me a call on 01908 774323 and let's see how I can help you.
Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.
Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.
When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.
No unauthorised use, duplication, distribution or modification to any original content contained within this blog is permitted without prior written permission of the author. All other trademarks and registered names are acknowledged.