Business Tax-Exempt Allowances for the Festive Season

Master the Art of Festive Benefits with HMRC’s Approval

Business owners to make the most of their festive season in a tax-efficient and meaningful way while keeping employees engaged and appreciated. Here’s a condensed summary of the key points to maximise your seasonal cheer while staying within HMRC’s rules:

Trivial Benefits

•Gifts under £50 per employee are tax-free. Examples include:

•Champagne

•Flowers

•Amazon vouchers

•Directors can claim up to £300 in multiple £50 gifts.

The Annual Party

Tax exemption criteria:

•Cost below £150 per person (including VAT).

•Open to all employees.

•One annual event.

•Virtual parties are eligible!

•If the cost exceeds £150, the full amount becomes taxable.

•Pro tip: Split the budget between a Christmas event and a Summer BBQ, e.g., £75 per head for each.

VAT on Entertainment

•Claim VAT for employee-only events.

•Spouses or non-employee guests are not covered, unless they are part of the business.

Gifts Over £50

•Over £50, the gift becomes a taxable benefit, so plan carefully!

Client Gifts

•To claim tax relief, gifts must be branded (e.g., branded water bottles).

•No tax relief for alcohol, food, tobacco, or vouchers.

Corporation Tax

•Christmas parties are fully deductible within the £150 per person limit.

•Applies equally to summer events and one-person Ltd companies.

Charity Donations

•Donations to registered charities are deductible, provided they don’t push your business into a loss.

Electric Cars

•Electric cars offer full tax relief.

•Personal use incurs a benefit-in-kind charge, often as low as 2%.

For more information and individual guidance do not hesitate to speak to us.