Tax relief on Christmas Gifts
Christmas shopping! Whether you love it, or loathe it, when it comes to business there is more to this annual spending spree than meets the eye!

Customer and staff Christmas gifts are seen as entertaining and so the costs incurred are not generally tax deductible. There are, however, exceptions to the rule.

 The following types of gift could be tax deductible…
  • A gift that also advertises the business, such as a branded umbrella or mouse mat
  • A gift of the company’s own product that is given away during the usual course of the business, such as a florist making Christmas bouquets for promotion to the public
  • Gifts to charity
  • Christmas gifts to employees as long as they are not excessive over the course of a tax year, so as not to be treated as a benefit in kind, which the employee may have to pay tax on

 The following are not tax deductible...
  • Anything consisting of food, drink, tobacco, or any voucher that can be exchanged for goods
  • Any gift over £50
Annual staff parties
Are you looking forward to throwing your Christmas staff party? Are you running around like a headless chicken trying to find a venue? Maybe it’s not even on your radar yet?

What is important is that you understand the conditions your annual staff party must meet for it to qualify as a tax-free benefit for your employees.

These conditions are as follows:
  • Total cost of up to £150 per person (including VAT, transport, accommodation - everything)
  • The primary aim of the event must be to entertain staff
  • It must be open to all staff - in other words, not just the directors getting together

If all these conditions are in place then the whole event cost can be claimed as an allowable expense for your business.

Have fun!
Tax relief for clothing
There is an overriding rule when claiming a deduction for the cost of clothing as a self-employed individual; the garment must be wholly and exclusively used for the purpose of your business. This is normally the sticking point with clothes – they are generally needed for warmth and decency, so the ‘exclusively’ part of the condition fails.

However, where the purpose of the clothing is to protect the individual or products, and the items are required to be worn in the work environment, the cost will be tax deductible. This would apply to hard-hats and high visibility jackets worn on building sites, or hairnets and latex gloves in a food factory.

The cost of a uniform required to be worn at work can also be deducted. 

To qualify as a uniform the items must not be part of your everyday wardrobe, and should be easily identified as a uniform by the logos attached to the items, colour or styling. Performers who need to wear a costume for their act can claim for the cost of the clothes, makeup, wigs, and shoes used in the performance.

However, where such clothing could be worn as everyday wear, such as a business suit, the cost will not be deductible.

If you want to claim for the cost of clothes or footwear you wear at work, you must keep a copy of the receipt (a digital picture is fine), and record why you need the item for your business. 
Tax refund claims
You don’t have to wait until the end of the tax year to reclaim any tax you have overpaid. It is now quite simple to do this through your online personal tax account ( personal-tax-account).

f you are still employed, your PAYE code should be adjusted so you receive your tax repayment as an addition to your next salary payment. However, young people who have worked during the summer to build up savings for university, may no longer have a job through which the tax repayment can be made.

These students may have had too much tax deducted from their wages, as £987 of their personal allowance is set against their salary each month, but over the whole year they may earn less than the full personal allowance of £11,850.

If the student doesn’t plan to earn a wage during the Christmas break, it would be worthwhile claiming a tax refund. This can be done by applying through their online personal tax account, or by calling HMRC. Be sure to note the date and time when calling HMRC, the name of the HMRC adviser, and who said what.

Tax refund claims can be made for the previous four tax years as well. The earliest year you can claim for is now 2014/15.

Get in touch - If you'd like to find out more about how we can help you and your business pay less tax, generate more profits and create long-term wealth for you and your family, please get in touch now