Why an Early Review Is Crucial
December is a busy month for every business. Between festive events, client commitments and year-end deadlines, it’s easy for financial planning to slip down the list.
Starting your review early gives you the space to make informed, tax-efficient decisions rather than rushed ones. You’ll also get clarity on what you can comfortably spend on seasonal celebrations while still taking advantage of the reliefs available.
Smart Planning for Your Christmas Business Spend
Staff Christmas Parties: Staying Within the Rules
HMRC offers generous tax relief on annual staff functions—but only if you follow the criteria. The allowance is up to £150 per head, including VAT, for all annual events combined.
Keep in mind:
- The £150 is per person, including guests
- It applies to all annual events in the tax year, not just Christmas
- The event must be open to all staff (or all staff at a particular location)
- Go even £1 over the limit and the whole amount becomes taxable
- Keep records of costs and attendance
A little planning now ensures your team enjoys a great celebration—without an unexpected tax bill.
Staff Gifts: What You Can and Can’t Claim
Employee Christmas gifts fall into two categories: trivial benefits (tax-free) and taxable gifts.
Trivial benefits qualify if:
- The gift costs £50 or less
- It isn’t cash or a cash voucher
- It isn’t a reward for performance
- It isn’t contractual
Gift cards, hampers and small seasonal treats usually fit the criteria. You can give several trivial benefits across the year.
Remember: Directors of close companies are capped at £300 per year in trivial benefits.
Not allowed:
- Cash bonuses (always taxable)
- Gifts over £50
- Anything related to performance
Client Gifts and Entertainment
Client entertainment isn’t normally tax-deductible. Gifts may be allowed if they:
- Cost less than £50 per recipient per year
- Are branded with your company name
- Are not food, drink, tobacco or redeemable vouchers
Client appreciation is always worthwhile—just budget knowing the tax position.
Your Year-End Expense Review
Carry Out an Expense Audit
A detailed check of your business expenses can unlock genuine savings. Look out for:
- Unused subscriptions or software
- Equipment purchases that could be moved forward to claim allowances
- Supplier invoices that should be paid before year-end
- Any personal outlays that need reimbursing
- Unclaimed mileage or expenses
This exercise can improve both your tax position and cash flow.
Contact Bells Accountants
Make the Most of Capital Allowances
If you’re considering investing in equipment, vehicles or technology, completing the purchase before year-end could allow you to claim the Annual Investment Allowance—currently up to £1 million in qualifying expenditure. Contact us on 0208 850 0070 or for personalised advice.