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Business gifts

What are the tax implications of sending my customers and suppliers Christmas presents? Do you have any ideas what I can buy them without losing out on the VAT and the expenses being disallowed for tax purposes?  

A business gift is made in the course of your business. You do not need to account for the VAT on business gifts, provided that gifts to the same period in any twelve month period do not exceed £50.

For tax purposes, ‘small gifts’ may not be disallowed, provided they meet the following conditions:

  • They carry a conspicuous advert for the trader (and the advert is on the gift itself- not just the wrapping)
  • The gift is not food, drink, tobacco or a token/ voucher exchangeable for goods
  • The cost of the gift (together with any other such gifts to the same person in the relevant tax period) does not exceed £50.

So you could give items such as branded diaries, clothing, bags, calendars, mouse mats etc. Whilst these aren’t particularly lavish, it will ensure that your costs are tax efficient.

If you wish to discuss gifts further, please feel free to contact your local TaxAssist Accountant.

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