The season of goodwill brings tax deductible gifts to one and all

‘Tis the season to be jolly and share the love with loyal customers. Giving corporate gifts at Christmas is a time-honoured way of saying thank you and maintaining important business relationships. The return on investment for a simple “thank you” knows no bounds, and guess what? There is a tax incentive for sending business gifts at Christmas, as long as you follow the rules.

When are Christmas business gifts tax deductible?

To clarify, here are the circumstances in which giving festive gifts is tax efficient:

When you are advertising your business

You can obtain a tax deduction if your gift abides by these simple rules:

-The gift carries an obvious advertisement for your business, in other words it is branded, as long as:

-It costs less than £50

-It’s not part of a package of gifts to the same person, in the same accounting period, which collectively exceed £50 

-The gift is not food, drink, tobacco or a voucher

-When you advertise your business by giving a gift, such as a free sample, to someone from the general public.

These rules apply to limited companies as well as sole traders and SMEs. If you are VAT registered, then any VAT on these gifts can also be recovered (excluding alcohol).

Be careful! Any gifts made that do not meet these rules would be treated as business entertaining and would not be tax deductible.

Employee Christmas gifts

You are entitled to a tax deduction on seasonal gifts to employees under £50 per employee, and you can reclaim the VAT on their cost. The gift must not be in return for a salary sacrifice, in respect of work carried out, cash or a voucher that can be exchanged for cash.

Christmas corporate gifts to charities

Festive business gifts given to charities are tax deductible. 

A win-win for branded promotional gifts

The HMRC rules dictate  that your corporate Christmas gifts must have a dual purpose to qualify for tax relief; firstly, to maintain a healthy relationship with your customers, but secondly – and more importantly when it comes to tax - to clearly promote your business. This is where branded gifts hold the advantage. If you elect to buy a gift off the shelf that doesn’t promote your business, you will not enjoy the benefits of claiming tax relief. Likewise, if you go along with a basic choice such as unbranded wine and chocolates, they will not be tax deductible. If they are branded then the food and drink rule no longer applies.

Christmas gifts from BusinessGiftUK.co.uk that are eligible for tax relief

There are many festive gift options available from BusinessGiftUK.com that can be branded, and for which you can therefore claim tax relief. We accommodate a range of budgets. Remember the tax relief is not applicable to the value of an order with us, but the value of a gift or selection of gifts to an individual customer. Check out a selection of universally popular pen sets here: https://businessgiftuk.com/product-category/pens/pen-sets/

We have a wide choice of gifts available, including Santa hats, snow globes, Christmas crackers, branded party poppers, chocolate coin nets and desktop advent calendars. We supply these branded with your logo or chosen image, making them tax deductible.

Get in touch

To find out more about our extensive range of promotional business gifts, call our team on 01772 429111 or email sales@businessgiftuk.com. We’d be delighted to help you save some tax and help you choose an appropriate gift for your audience!

Note our blog is written in good faith but you should always take the advice of a qualified accountant when considering tax matters.