With November fast approaching it’s definitely time to think about Christmas, even if you don’t actually do anything about it just yet.

Most small businesses want to send a small gift to their key clients to say thanks for the business, so here are the things you need to bear in mind when ordering your corporate Christmas gifts in 2023.

You might also want to give your team a little something as a thank you for all their hard work, so we’ve included a bit of info about that too.

The rules about gifts for clients

HMRC allows you to give a client one gift each tax year and claim it as an expense against profits as well as reclaiming the VAT, subject to a few criteria:

• The present must not be food, alcohol, or tobacco, or vouchers that could be exchanged for food, alcohol, or tobacco
• The gift must have conspicuous advertising for your firm. If you don’t want to buy branded gifts you could look into branded stickers to add to them. Don’t leave it too late if you do want to send out corporate gifts as many branded items have a long lead time
• It must not cost more than £50 per client, otherwise HMRC won’t allow you to claim a penny towards it – and that includes the cost of wrapping paper!

The rules about Christmas gifts for staff

Any money you spend on Christmas presents for staff is taxable, except if the gift is considered “trivial”. HMRC won’t disclose what trivial actually is, so we recommend a box of chocolates or bottle of wine would probably count but a whole hamper or a magnum of champagne probably wouldn’t!

Gifts of money must be made through payroll, taxed and subject to appropriate National Insurance. Employees must also pay the tax on gift vouchers, which need to be accounted for on the P11D.

Let’s assume you also want to throw a Christmas party for your team. We wrote a blog about the rules around that, so check it out for more tips.

Tax relief on trimming up your office

Just as an aside, the cost of trimming up your office can be claimed as a business expense – although not if you work from home. Keep the receipts and scan them into ReceiptBank so the money can come off your taxable profits.

As always, if you’re not sure what to do about Christmas gifts, do give one of the friendly TLC team a call and we can advise.