Q&A December 2019

Q. Will Christmas gifts to my customers be tax deductible?

Yes, as long as you follow certain rules. Christmas is a great time to show your team, clients and suppliers just how much you appreciate them with a gift. Whether you’re a limited company or a sole trader, you can treat the cost of gifts as an allowable expense for tax purposes, as long as you follow the rules:

Don’t spend over £50 – including gift wrap

You can only give gifts totalling £50 to each client each tax year, so if you’ve already treated them this year, bear in mind the £50 limit. The budget includes gift wrapping so it might be time to embrace the eco-friendly brown-paper ethos. If you do go over the limit the gift will be disallowed and liable for tax.

You cannot give food, drink or tobacco

The gift must be business related; it cannot be alcoholic, food, tobacco or vouchers that can be exchanged for those things.

The gift must contain a clear, lasting advertisement for your business

The gift must also carry a clear advertisement for your business, otherwise it would be classed as entertainment expenses. It’s a great idea to get your company logo in front of your clients but make sure the logo is on the item itself, not just the packaging.

Q. On a business trip abroad last month, I tripped over and broke a tooth. I paid the emergency dentist bill using my company debit card. Will I be taxed on the dentist’s fee as a benefit in kind?

A. No, it would only have been a taxable benefit if the cost had been incurred while you were in the UK. As you were working outside the UK at the time, your company can pick up the bill with no tax cost to you. The dental bill is also a valid deduction for the company as it forms part of the cost of sending you to work abroad for a short period.

You should seek advice about your specific circumstances before taking any action. Contact us if you have any questions or, if you would like to sign up to our monthly newsletter, please complete the form below.