Whilst Christmas is still a few months away I expect many of you are starting to make plans, so it’s a great time to do some Christmas tax planning (if you’re a Limited Company). Read this blog for ways you might be able to save yourself money this Christmas.
If you are having a company Christmas party this can be an allowable expense against corporation tax as long as the cost per head is not more than £150.
To be an allowable expense the party must be open to all staff members and you must hold an event (you can’t just give £150 cash etc).
If you have held other events or parties during the year then the total cost for the year must not exceed £150 per head.
If you are the only employee in your company (or you are a director not taking a salary). You can still benefit from this, and could hold a company Christmas party for you and a plus one to celebrate all your hard work this year! (This would be allowable against your corporation tax bill, but wouldn’t be an allowable expense on your VAT return if you are VAT registered).
If you would like to give gifts to your employees this can also be an allowable expense for corporation tax, provided the gift is not worth more than £50. This includes vouchers provided it can’t be exchanged for cash.
If as a director you would like to take advantage of this, there is an annual cap of £300 per director, so you could take 6 gifts during the year each worth up to £50.
The gift can’t be a penny more than £50 or the whole amount will be taxable, and there will be additional forms that need to be filed with HMRC.
Whilst this is a great way to take an extra £300 a year out of your company without any tax consequences, the rules around gifts are strict, and if you get it wrong it could end up costing you more. If you would like to have a chat about the best way to give gifts from your company please get in touch.
If you would like to give out customer gifts these can be an allowable expense, provided your company logo is on the gift. The important thing to remember with this is that the gift must be on the gift, and not just on the gifts packaging.
Of course these rules don’t just apply at Christmas. If you would like to have a company party or give gifts you can do so any time during the year and it will be an allowable expense, provided it is within the rules above.