November 2018

Business Talk
– for example, a branded golf umbrella, mouse
mat or diary. These items would be fine and
should be tax deductible. However, if the gifts
consist of food, drink, tobacco, or any voucher
that can be exchanged for goods, then that is not
tax deductible, even if the festive chocolates are
emblazoned with the business logo. There is a
further restriction in that the cost of the gift
cannot exceed £50.
There is a relaxation of the rules where a
company makes a gift of one of their products,
and the item is given away during the ordinary
course of that business, to advertise to the public
generally. For example, if the business is a
chocolatier, then it could make a Christmas gift of
chocolates to the general public for promotional
purposes and obtain a tax deduction for the cost
of the chocolates. Clearly that’s not likely to apply
to roofers.
Christmas gifts to charities are also tax
deductible.
And while on being festive, if you want to play
music in the business – especially at base –
from an iPhone, internet stream, CD, or the radio,
you’ll probably need a PRS for Music licence. PRS
for Music collects and distributes money for the
“Follow the rules and
note key dates in your
diary and you’ll gain tax
relief on what you
spend”
use of the musical composition and lyrics on
behalf of authors, songwriters, composers and
publishers. You may also need a PPL
(Phonographic Performance Ltd) licence to legally
play recorded music in public.
PPL collects and distributes money for the use of
recorded music on behalf of record companies
and performers. See
https://www.gov.uk/licences-to-playbackground-music
for more detail.
Staff Christmas party
There is no specific allowance for a ‘Christmas
party’ as such, however HMRC does provide
limited tax relief for the cost of holding an ‘annual
event’, providing certain conditions are met.
Your business is entitled to provide an annual
event for yourself, any staff you employ, and your
partner, and reclaim the costs against the
company, as long as the cost per head does not
exceed £150 (including VAT).
The cost per head can include accommodation,
transport, and food and drink – but must not
exceed the £150 threshold, even by a penny, and
the event must also be open to all staff.
You may decide to hold several events throughout
the year, but the total claim for all events must
not exceed this threshold.
Importantly, as with all expense claims, you do
actually have to hold an event in order to reclaim
the costs against your company. You can’t simply
make a cash claim for £150.
To calculate the cost per head, HMRC states that
you should ‘divide the total cost of each function
by the total number of people (including nonemployees)
who attend in order to arrive at the
cost per head. The detail is at
https://www.gov.uk/expenses-benefits-socialfunctions-parties.
Remember, as if it really needs saying, Christmas
should be a time of goodwill. Follow the rules and
note key dates in your diary and you’ll gain tax
relief on what you spend without missing
deadlines.
96 TC NOVEMBER 2018