This question always comes up at this time of year, so it’s worth a quick blog post. (and it will be quick too, because the rules are really very simple..)
HMRC will allow you to give a business gift worth up to £50 to any one person, in any one tax year. Added to which, the gift must be a business gift. For example, a diary, pen, notebook etc. And it must carry conspicuous branding for your business.
It must not be food, alcoholic, or a voucher which could be exchangeable for food, drink, or tobacco.
The bad news, is that if the gift costs more than £50, HMRC will disallow the whole lot, not just the ‘over £50’ element.
If the gift does not carry a conspicuous advertisment or branding for your business, there’s every chance that HMRC will class this as entertainment, which of course, is not allowable.
So, to recap:
A branded gift, not tobacco, food, or alcohol, and under £50 in total for the year. Simples!
You’re lucky enough to employ staff?
HMRC will allow you to spend £150 per employee on a party. (I’m thinking not just Christmas, but summer BBQ etc here). This can be split between more than one event, but, as stated above, not be above the £150 limit, or the whole lot is disallowable. Very much a scorched earth policy at work here.
A quick note though:
If partners are also attending the party, the expenditure is allowable for tax, under the condition that the total figure, inclusive of guests, still amounts to no more than £150 per attending employee.