* indicates required

Factors to consider for festive shopping

By Ola Sulaimon

Ronzl Accountants

THE time to be jolly has come again and I was reminded of this fact when I saw my favourite mince pies on the shopping racks recently.

This time is also the time we love to show appreciation to our clients, our team members and also our family. We often do this by giving them gifts, entertaining them by throwing Christmas parties, etc.

However, it would be more fantastic if you were able to claim tax relief on these gifts -that could be like your Christmas gift from HMRC.

You could think, obviously, that business gift and client entertainment would be deductible as an expense and wonder why this is a gift. If you don’t meet certain conditions, even when these transactions are made for business reasons, they are disallowed for tax purpose, therefore you miss that Christmas gift.

Conditions for gifts and entertainment to clients:

Client entertainment is disallowable for tax purposes. Businesses can claim relief when:

* The cost of the gift is not be more than £50.

* The gift is given for advancement of your trade, therefore it must bear the business name, logo or clear advertisement.

* It is not a food item, alcoholic drink or tobacco.

Conditions for gifts and entertainment to team members:

Staff entertainment is actually allowable especially annual events such as Christmas parties. The cost per head for these employees must not exceed £150 and if they invite another person that is not an employee of the company, the staff would pay tax on the benefit so, therefore, the amount is deductible by the company

When the business gives Christmas gifts to its team members, the conditions of a ‘trivial benefit’ have to be met for the business to be able to claim tax relief for these as well:

* The gift offered to the employee must not be cash or cash voucher.

* The cost of the gift must not exceed £50 for each employee.

* The gift offered to the employee must not be provided as pursuant to the relevant salary sacrifice arrangement. The employer must not have obligations to pay the employee or include this benefit in the employer benefit packages.

* The gift offered to the employee must not be in recognition of particular services or employee rewards for services performed by the employee.

To find out more contact Ronzl Accountants Ltd, 51 Billing Road, Northampton. Call 01604 965826 or see the website at www.ronzlaccountants.co.uk

Companies mentioned in this article

More financial articles: