We can all appreciate Christmas is an expensive time of year both in business and personally, whether it’s buying gifts for loved ones and colleagues or increasing your advertising budget. So here are four Christmas business expenses you should be claiming this festive season to help with cash flow into the new year. Let’s just call it an early Christmas present from us at Southside Accounting – you’re welcome!
1. Tis the season to be jolly
Did you know? You can claim tax relief on tinsel!
Christmas decorations for your office is a seasonal tax benefit, regarded as day to day running costs of running your business, allowing you to claim a reduction in your profit and overall tax bill. So if you work primarily from an office, it’s a win-win – bring festive cheer to your team and clients by decorating your office tax free!
As an aside, if you work from home, unfortunately you won’t be able to claim back on any Christmas decorations as the taxman deem the enjoyment of the decorations to be for both personal and business use. The rule of thumb is that if you can prove an expense is wholly and exclusively related to business, you should be able to claim tax relief.
If you are seeking advice on expenses you can claim for legitimately to help reduce your tax bill, please do get in touch.
2. Give generously
Did you know? You can gift your clients at Christmas, and indeed anytime of year, tax free?
Looking to show appreciation to your clients this Christmas? You can account for this as a fully allowable business cost, as long as you meet the following conditions:
- £50 per client, per year
- Any type of gift is allowed except gifts that can be exchanged for goods or cash, such as vouchers, food, drink or tobacco
- The gift must advertise your business in some way, such as your printed logo or conspicuous branding
3. Christmas staff party
Dread them or look forward to them all year, the Christmas party is a staple item on the annual agenda, and an office Christmas party is a great way to thank your employees at year-end and tax free!
4. Christmas presents to staff
If you run a small business with staff, you may want to take the opportunity at Christmas time to show your appreciation and give a gift to your employees.
If you give an employee a small non-cash gift at Christmas, the tax man may view this as a trivial benefit. This is very different, for example, if you decide to award your staff for good service or length of service.
If you do decide to gift your staff a trivial benefit you do not have to report it on the employee’s form P11D and you are not liable to pay tax or national insurance.
If, however, if your gift has a cash value such as a gift voucher, you will either need to report this gift either as part of an employee’s earnings, so they foot the tax bill, or if you would like to pay the tax liable, you would report the gift on the employee’s P11D form. HMRC has issued some official guidance on this here.
Make the most of tax reliefs so you can get 2020 off to a flying start
Southside Accounting are your local cloud accountants in Wimbledon and London. We’re local, like you. And we’re a dynamic small business. Just like you.
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Written by Shaima Todd.