Christmas is now in sight – bringing with it presents, parties and new prospects for the New Year. But the season of celebration and generosity doesn’t have to mean expense in all areas for your business!

From transforming your office to reflect the festivities in the Christmas countdown, to letting your hair down during a much-needed celebration with your team after a strong year, read on to learn about how your business can enjoy the gift of tax relief this Christmas.

What Can My Business Save on this Christmas?

There are certain outgoings within your business that you are able to record as day-to-day expenditure, for the reduction of your total taxable income through the HMRC, and these outgoings can therefore be considered tax-deductible. This is great for times such as Christmas, to spread the cheer without the concern of additional expense.

In such times, treating your employees to a team meal or party is a popular choice – but it is important to be aware of the tax implications based on how much is spent, and who is invited.

Regulations implemented by the HMRC in recent years now enable businesses to spend up to £150 per employee each year on business social functions and entertainment, completely free from tax. .

This means that you can hold as many events as you like for your employees with this tax-free status, providing your annual spend for these events is below £150 per employee, and all members of staff at your specific location are included.

If the spending surpasses this value even slightly, this £150 has already been spent elsewhere, or non-employees are factored into these celebration costs, the entire cost will lose its tax relief claim, and will be counted as a taxable benefit towards employee salaries.

As part of your Christmas celebrations, you may also be considering gifting your employees or company clients to show your appreciation. Tax relief can again be claimed on gifts, providing they:

  • Cost less than £50
  • Are not food, drink, tobacco, or a voucher value exchangeable for goods
  • Conspicuously advertise your business
  • Are not being presented based on employee contractual obligation, or in recognition of their stipulated duties as an employee

However, in such circumstances, the HMRC now also allow a ‘Trivial Benefits’ exemption, enabling employee gifts with no tax liability, providing these gifts do not exceed the value of £50, and are a personal, non-work related offering, again not related to recognition of the employee’s duties or contractual obligation.

Business directors are also entitled to Trivial Benefits up to the value of £300 – and so this can also be put towards Christmas celebrations.

What Next?

For additional information about the tax savings available to you and your team, how CDC Accounting can support you with your tax responsibilities, and the other financial and strategic services offered here, view our website, call us on 01490 372012, or email us at: contact@cdcaccounting.com.