Every year, we get quite a number of queries from clients about what their business can claim at Christmas on expenses.
Like many aspects of business accounting, there are lots of rumours out there and false information is rife – not least about just how generous you can be to yourself as the festive season approaches.
While putting family gifts and your Christmas lunch at home through as a business expense is not advisable, there are many things which do legitimately qualify and knowing about them could save you money.
To keep you on the right track, here’s our quick guide to what you can claim as a business expense for Christmas.
Employers are able to throw a party for their employees costing up to £150 per head and claim it as an expense. Whether you’re treating the team to a posh lunch or hiring a venue for a party night, the type of celebration doesn’t matter.
There are a few restrictions, such as the event being open to all employees, but as long as the total cost isn’t more than £150 per person (and this means the entire cost divided by the number of attendees, not just the cost of a meal after venue hire, for example), you’ve got another reason to celebrate at Christmas.
Of course, things are different for sole traders. Sadly, treating yourself to lunch does not count as a business expense in the same way as it would if you had employees!
If you hand out a bonus to staff at Christmas, or indeed any time of year, it has to be recorded along with their routine earnings for tax purposes. Large financial bonuses will of course incur greater tax and National Insurance penalties.
However, if you give non-monetary gifts, the rules are different.
Gifts worth £50 or less, which aren’t rewards for performance or part of the terms of their employment are exempt from tax and National Insurance. They’re known as ‘trivial benefits’ and are often used for giving employees a Christmas gift. Of course, these gifts aren’t limited to Christmas only; they can be spread throughout the year. There is a restriction for directors – they can receive a maximum of £300 worth of trivial benefits in a tax year.
If a gift doesn’t class as a trivial benefit because of its higher value or any other reason, it is subject to tax.
What to claim at Christmas on expenses
- If you want to know more about Christmas expenses, or check you’re staying on the right side of the rules, we’re happy to help. Call us on 01423 564446 or contact us via the website.