🎄Claimable Business Expenses at Christmas: A Quick Guide🎄

Christmas is a time for giving, celebrating, and showing appreciation to your team and clients. But did you know some of these festive costs can be claimable business expenses? Here's a quick guide for both sole traders and limited companies to make the most of the festive season while staying tax-efficient.

Staff Gifts & Parties - for employees only

Staff Gifts:

• You can claim gifts up to £50 per employee (inclusive of VAT) under the Trivial Benefits exemption.
• Gifts must not be cash or vouchers exchangeable for cash.
• The gift cannot be a reward for performance or contractual obligation.
• Examples: hampers or chocolates but no alcohol or tobacco.
• Directors can receive gifts of £50 to a maximum of £300 per year

• Costs up to £150 per person (including VAT) are tax-deductible.
• Includes food, drink, entertainment, and even transport.
• The party must be open to all employees.
• An annual event so xmas party or summer BBQ
• Can invite partners too with a budget of £150 per head

Subcontractor and Clients Gifts

• The cost is reasonable (HMRC doesn’t specify a limit, but staying within £50 per year limit is a safe benchmark) and promotional in nature.
• The gift is not alcohol, food, or tobacco (unless branded with your logo).
• The gift is not cash or vouchers exchangeable for cash.
• It is genuinely a token of appreciation and not a contractual obligation or performance-related reward.
• Examples: branded pens, calendars, or mugs.
• Can be non promotional if rewarding good customers but wont be tax deductible.

• Gifts to subcontractors are considered a business expense and can reduce taxable profits - but only if branded, that box of chocolates or bottle of wine doesn’t save tax but does build an appreciative relationship
• VAT can be reclaimed on the cost of the gift if you are VAT-registered and the gift is tax deductible.

Charitable Donations
Both sole traders and limited companies can claim for:

• Donations to registered charities, including gifting goods or services during the festive season.

Decorations & Festive Supplies

• can claim the cost of office decorations, such as Christmas trees and lights, as a business expense.
• cannot claim for decorating their home office!

• Receipts: Always keep receipts and clear records for HMRC.
• Dual Purpose: Expenses with personal and business use (e.g., home decorations) are not claimable.
• Seek Advice: Rules can be complex. Consult your accountant for tailored advice.

By understanding these guidelines, you can spread Christmas cheer while staying tax-efficient! 🎄