Making Your Christmas Gifts Work Harder: A Tax Guide

Christmas shopping for your business? Before you reach for that credit card, take a quick look at our guide.

Christmas shopping for your business? Before you reach for that credit card, take a quick look at our guide. Get it right, and HMRC will effectively contribute to your festive generosity through tax relief. Get it wrong, and you could face an unwelcome tax bill.

Team Gifts Made Simple Want to treat your team this Christmas? Keep it to £50 per person (including VAT) and you can claim tax relief. Think quality bottles of wine, department store vouchers, or those hampers everyone loves. Just don’t go over that £50 mark – even by a pound – or you’ll lose the tax benefit entirely.

Director’s Treats: The £300 Rule Running a small company? Directors can receive up to £300 worth of gifts across the tax year, but here’s the catch – each individual gift must still be under £50. So that’s a ‘yes’ to six £50 gift cards spread across the year, but a firm ‘no’ to one £300 splurge. Remember, this limit includes gifts for family members too.

Watch out for these gotchas:

• Cash is a definite no-no
• Gift cards must not be exchangeable for cash
• Work performance rewards don’t count
• Keep every receipt

Keeping Clients Sweet Client gifting needs a careful touch. That bottle of Champagne or branded diary can be tax-deductible if you keep it under £50 per client (including VAT). But skip anything with the client’s name on it – HMRC considers personalised gifts as ‘entertainment’ which isn’t tax-deductible.

The Christmas Party Bonus Planning your office party? You can spend up to £150 per person (including VAT) and claim it against tax. This covers everything – food, drink, transport, accommodation. Having multiple events? That £150 is your annual limit, so plan accordingly.

Top Tips for Getting It Right:

• Set calendar reminders to track director gifts across the year
• Brief your team on the limits – especially if they’re buying gifts
• Keep a simple spreadsheet of what you’ve given and to whom
• When in doubt, drop us a line before you spend

The Bottom Line

Christmas gifting doesn’t need to be complicated. Plan ahead, stay within the limits, and keep good records. That way, you can focus on what really matters – showing your appreciation to the people who make your business successful.

Need specific advice about your gifting plans? Just give us a call – we’d rather help you get it right than fix it later!