‘Tis The Season Of Giving – Some Christmas Cheer From The VAT Man
Here we are again – can ‘yule’ believe it’s that time of year when businesses like to ‘present’ their staff with a reward for all their hard work? Did you know that certain gifts can be tax efficient? The VAT man won’t entirely ‘reindeer’ on your parade.
First off, we have employee gifts. It doesn’t have to be ‘deer’, in fact as long as the value of gifts given to each employee doesn’t exceed £50 (exclusive of VAT) within a 12 month period, then you don’t have to declare output tax. If however, you’re feeling overly generous, and exceed the £50 limit, then you have to declare output VAT on the total amount of those gifts. He’s not a total Grinch though, you will be entitled to reclaim input VAT on the purchase cost. The £50 limit does not include administrative expenses, e.g. postage and packaging, and the offering must meet the gift criteria in order to qualify.
Then we have the Christmas parties. If you decide to ‘wrap’ up 2016 with a Christmas party for employees, you can reclaim VAT on all the costs. If guests are invited along too (since Christmas is a family affair) then you must apportion the VAT reclaimed to reflect this.
And that’s a Christmas Wrap, we hope you have a Happy Holly Day, from all at Green & Co.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.