VAT on staff Christmas presents

If you give away goods and are entitled to recover VAT on them, you must account for VAT on their cost value. So I’m afraid this means the VAT position is neutral.

However, you do not have to account for VAT on ‘business gifts’ made to the same person so long as the total cost of all the gifts does not exceed £50 (excluding VAT) in any 12-month period. A ‘business gift’ is simply a gift of goods that is made in the course of your business.

Gifts and entertaining is a complex area, as it can have a multitude of tax, National Insurance and VAT implications. Please feel free to contact your local TaxAssist Accountant if you would like to discuss this further

Date published 31 Oct 2014

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.