Making it a tax free Christmas

With the festive season now in full flow, it is very easy to get caught up in the season of giving but the wrong type of gift or being too generous (is that such a thing!) could end up with a painful tax bill in the New Year.

Follow a few simple rules to keep everyone happy including the Revenue!

Gifts to Staff

In days gone by, it used to be the traditional turkey was given to staff.  Although still a helpful gift, these days gifts vary enormously.  The guidance is that providing the cost of a gift is no more than £50 per employee no tax charge arises.  This can cover many things ranging from the traditional turkey through to high street vouchers but it cannot cover cash gifts.  These must still go through the payroll.

Gifts to Suppliers

Unfortunately, the Revenue is not so generous in relation to gifts to suppliers in that if it is either food or beverage that is not deemed to be a trading expense.  However, if it is a gift-bearing some form of advertising on it and the unit cost is less than £50 then it is an allowable business expense.  One can never have too many umbrellas!

Staff Entertaining

There is no better way to celebrate Christmas at work with a great Christmas Party.  The Revenue give an annual allowance of £150 per person but this has to cover all events that staff are invited to throughout the tax year.  You could go mad and throw everything at one large party each year or, you could spread that allowance over a number of events.  If you do go over the allowance you can choose the event that takes you over in order to minimise the tax cost.

Don’t forget, this allowance also includes all the ancillary costs of the event i.e. transport costs to and from the venue, hotel if you stay over, etc.  Unless, the company picks up the tax on the excess over the £150 allowance, strictly speaking, the excess is taxable on an employee.  Now that would not be a welcomed Christmas Present!

Let’s make 2018 a joyous Christmas and by following a few simple rules, the only hangovers that one will need to worry about in the New Year are those that are alcohol induced.

Patricia Kinahan, Hazlewoods

Hazlewoods team of 27 specialises in strategic, financial and taxation matters across the legal sector. Collectively we have amassed over 185 years’ service in advising law firms of all shapes and sizes.

Hazlewoods is well known for looking after the production of statutory accounts in compliance with Companies Acts, conducting audits under SRA Accounts Rules, and satisfying HMRC regulations through the submission of tax returns and computations.

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