10 December 2012

Gifts at Christmas

It is not uncommon to be asked the tax efficient value of gifts which can be given to customers at Christmas. The answer has to consider the tax position of the company making the gift and perhaps surprisingly the position of the recipient. We are only considering here people who are NOT employed by the giver. The giver: the tax legislation treats small gifts in the same way as entertaining and consequently they are generally not an allowable expense of the company. This rule is however disapplied where the gift contains a conspicuous advertisement for the trader, it does not exceed £50 in value and it is not food, drink or tobacco, nor a voucher exchangeable for goods. Not really restrictive then! The recipient: provided the gift is made by an unconnected third party the recipient will not be taxed on gifts up to a value of £250 (including VAT). If the gift exceeds £250 the full amount is taxable.