Sue Fleet-Chapman blogs…
It’s nice to receive; it’s even nicer to give.
When you give a gift, you expect the gift to be received in its entirety! This is not always the case.
Why?! I hear you cry!
Some gifts are subject to tax, that’s why! Personal tax and/or business tax.
So if you believe your wonderful employees have worked their little fingers to the bone and deserve that well earned bonus (gift), or a particular Customer or Supplier warrants a little thank you, then this may be of interest to you.
The general rule is that expenditure on gifts and entertaining is non-deductible. This applies to amounts reimbursed to employees for specific entertaining expenses and gifts, and to round sum allowances which are exclusively for meeting such expenses.
These are normally deductible, although if excessive, a benefit in kind can arise? The entitlement currently is £150 per employee per year, if you are extra kind and you treat your staff occasionally then bare this in mind.
Any cost that takes you over this magic number is then taxable.
Gifts to customers not costing more than £50 per donee per year are allowed if they carry a conspicuous (it needs to be seen, people) advertisement for the business and are not food, drink tobacco or vouchers exchangeable for goods.
Gifts to Charities
These may be allowed although the powers that be have the ‘wholly and exclusively rule’ and this type of gift may fall foul of this rule. If a gift aid declaration is made in respect of a gift, tax relief will be given under the gift aid scheme, not as a trading expense.
This is not a comprehensive list, just a few gifts that are given in day to day business.
If you are considering giving a gift to anyone (employee, client, supplier) and not sure how this affects your business or the donee then drop us a line, or give us a call!
Sue Fleet-Chapman AAT