Seasonal tax advice for your business

With winter now upon us, many businesses will want to spread some festive cheer. However, it is important to consider the implications that any arrangements may have on your business and its tax liabilities.

Festive parties

Tax exemptions exist for staff parties, but conditions apply, so it is important to be aware of these before making any concrete plans.

Tax relief applies to 'annual parties' and is available on a £150 spend per head, inclusive of VAT. This £150 per head applies to everyone attending the party, not just employees, and covers any expenditure that the business pays for, including taxis or accommodation for attendees.

If the amount per head is exceeded, then tax will need to be paid as a benefit in kind, on the whole amount spent at the party, not just the proportion that exceeds the limit. This tax will either need to be paid by reporting the benefit on the employee's P11D form, or the grossed up tax can be settled through a PAYE Settlement Agreement (PSA). A further national insurance bill will also be payable if this occurs.

All employees must be allowed to attend the party, including any temporary workers that have been taken on for the festive period.

Third party gifts

Gifts that your employees receive from third parties such as business associates or clients are exempt from tax, providing their cumulative value is less than £250. Anti-bribery rules apply when dealing with these gifts.

Promotional gifts

Staff may receive promotional gifts tax-free provided that the overall cost of the articles involved does not exceed £50 per person per year. Such items are normally purchased for advertising purposes and must display a 'conspicuous advertisement'. Good examples might be diaries and calendars with the firm's name embossed on the cover.

Gifts of food, drink, tobacco or vouchers are specifically excluded.

Charitable donations

Considering making a donation to charity? Through the various forms of Gift Aid, gifts of cash, trading stock and investments can be made tax-efficiently - a bonus for you and for the good cause.

For more information on the tax implications for your business, please contact us for advice.