Christmas is a time for giving, and many businesses like to show their appreciation to clients with festive gifts. Whether it’s a bottle of wine, a box of chocolates, or a bouquet of flowers, thoughtful gestures can strengthen relationships and leave a lasting impression.

But when it comes to tax, not all gifts are created equal. Let’s explore what’s tax deductible and how to maximise the benefits for your business.

What Makes a Gift Tax Deductible?

To claim tax relief on client gifts, HMRC has strict rules. The key requirement is that the gift must qualify as ‘advertising’. In practical terms, this means:

1. The Gift Must Be Branded
   For the expense to be allowable, the gift must display your company logo or branding. Think along the lines of branded pens, calendars, or mugs.
2. The Value Must Be £50 or Less
   The cost of the gift must not exceed £50 per client, inclusive of VAT. Anything over this limit will not qualify for tax relief.
3. Alcohol, Food, and Vouchers Are Not Allowed
   Gifts like wine, hampers, or gift cards are excluded from tax relief. While they may be appreciated, these items are not considered advertising by HMRC’s standards.

The Rule of Thumb

The general rule is simple: the gift must promote your company. Items that enhance brand visibility, like a useful desk item or a stylish notebook with your logo, are more likely to meet HMRC’s criteria.

Non-Tax Deductible Gifts

If your gift doesn’t meet the criteria—such as being unbranded or exceeding £50—it won’t be tax deductible. However, that doesn’t mean it’s not worth giving! Non-deductible gifts can still have great value in maintaining strong client relationships.

Get the Business You Want

By choosing branded, affordable items that align with HMRC’s rules, you can spread festive cheer while also benefiting your business financially.

Need help understanding the rules or planning your festive gifting strategy? Get in touch with us at Carthy Accountants. We’re here to ensure your gifts meet both your clients' and your business's needs.

At Carthy Accountants, we’re Helping You Get the Business You Want.