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?

1st December 2012

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.

By Jo Nockels

Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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