The Christmas countdown has begun and we couldn’t be more excited at Blue Rocket.
It’s been another tough year for businesses and with an unpredictable month ahead we’re all keen to make sure this Christmas is sufficiently celebrated.
Office party season is now in full swing and understandably you’ll want to treat staff and clients for their dedication and support throughout the year. Yet like many other, you’re also wary of potential challenges around the corner and don’t want to overspend.
You can strike the right balance and understand which expenses you can claim. Though there’s no actual ‘Christmas Party’ allowance, HMRC do allow some exemptions for Christmas related entertaining and expenses.
Now the tax man isn’t as generous as Santa, but there are still some savings to be had, as well as some considerations you need to think about when you are out celebrating this December.
Here are some tax tips for Christmas, Merry Christmas from all at Blue Rocket Accounting, and enjoy the tax savings this festive season!
Time to party – don’t forget that elements of the annual Christmas party are tax deductible (unless you are a sole trader, you can’t take yourself out for a meal and deduct the tax). As long as you don’t spend over £150 per head (including transport and accommodation) and the event is open to all staff then you can start celebrating!
Christmas gifts to clients – yes you can give your favourite client, supplier or customer a Christmas present which is tax deductible as long as it’s less than £50 (for the whole year) and that it has to incorporate some advertising for your business. So, time to crack out that latest landlord leaflet that you have had designed (yes, we have got one). And bad news, that bottle of prosecco is excluded, as is tobacco and food, so no mince pies. And forget that M&S voucher too.
Christmas gifts to staff – now we know the idea of dressing up as Santa at the Christmas party is one which you look forward to every year, but doling out the presents to your employees does have a tax perk. Again, the cost must be less than £50,and it’s not something that’s part of their contract, or is given as an award for their performance. It’s just because Christmas is the time for giving for the sake of giving and to give you a warm feeling in your tummy. But slipping a fiver or a voucher into a card just isn’t going to cut it, as cash and vouchers as exempt from this rule. HMRC has to class any gift as being trivial. So, when Scrooge gives Bob Cratchit a turkey, he’s got the tax man in the back of his mind…
The Christmas bonus – now here’s where the tax man does go a little bit Scrooge, as all Christmas bonuses are classed as additional salary, and therefore subject to PAYE and NI as normal. So, don’t forget to take this into account when calculating the sums.
Now all you need to do is get into the Christmas spirit and enjoy the tax perks that come along with the season!
The best way to ensure you’re not missing out on any tax-deductible Christmas expenses is to plan ahead and take advice from your accountant.
For more information or advice on business expenses, get in touch with our team today.