Christmas! A time where many companies like to show appreciation to various people, from staff to clients. We all know that Christmas can be an expensive time for individuals, let alone business owners. If you are a business owner, then you may be wondering ‘what Christmas expenses can I claim?’ We’ve put together a few ideas for you.
Firstly, you might consider having a Christmas party. We say go for it. As long as you follow a few rules you can claim the costs of an annual Christmas function as a business expense.
- The party must include all employees in one location.
This includes all directors, staff and guests. Guests can include spouses and children.
- The party must be an annual event
This means that it needs to be something that occurs yearly. For instance, Christmas Party, Halloween Party, Summer Picnic. Something like celebrating your biggest sale or client would not qualify as this is something that doesn’t happen every year.
- The cost must not exceed £150 per employee
You need to remember that the £150 is per year and not per event. So, if you want a posh Christmas party then go for it but chances are you won’t be able to claim for another event during the year. Whereas you could do a summer picnic at £50 a Halloween Party at £50 and a Christmas party at £50 and this would still be claimable. Make sure you are really careful though as if you go over the £150 exemption by as little as 1p then you will be unable to claim any of it. Remember that this £150 includes VAT, transport costs and any accommodation costs.
Next, you might think about your clients. Are you going to entertain them this year? Are you going to try and minimise costs and invite them to your staff Christmas party? Some businesses decide that this is a perfect thank you for them giving their business to you as opposed to somebody else.
Before making your decision just bear in mind that entertaining clients is not deductible. This would be classed as Business Entertainment therefore fully taxable.
Are you going to send your clients any gifts this year? Again, as long as you follow a couple of rules these to can be allowable expenses.
- Must be a clear advertisement for your business
For example, your company name or logo must be clearly visible
- The cost must be under £50
This has the same rules as the parties, and you must not exceed the £50 by even 1p otherwise the whole cost will be taxable
- The gifts must not be food, alcohol, tobacco or vouchers
These kinds of gifts would be classed as entertainment and again would be taxable.
What about your employees? Are they getting a gift or are you thanking them in the form of party or bonus?
Well, you can claim back any costs for ‘trivial’ gifts you purchase for your employees, again as long as certain criteria are met:
- The gifts should conform to the season
- The gift should cost £50 or less
- Should not be cash or a cash voucher
We’re talking things like, a box of chocolates, bottle of wine even a Christmas pudding. All of these tick the boxes. Do you know which your staff would prefer?
Now you’ve taken care of all of the planning it’s time to make your work area look festive. So, what about Christmas decorations?
Whether the decorations count as an allowable expense all depends on where your business is. If you work from home, then unfortunately any decorations would be classes as personal expenses therefore wouldn’t be allowable. If, however you work from an office, shop or anywhere else that is not your home then these most definitely class as allowable expenses.
I hope that we’ve helped to answer some of your questions in here. If we’ve missed anything then there is lots of help available on the Government website
You can also, as normal, get in touch with us with any queries. We will be happy to help you.
As ever, please don’t make any rash decisions. Plan and budget and make sure that you’re ticking all of those boxes.
We hope that we have given you some idea of what Christmas expenses you can claim and would like to wish you all a very Merry Christmas.