Tax Saving Advice: Guidance on Christmas Parties and Gifts

Tax Saving Advice: Guidance on Christmas Parties and Gifts: "Once again the Christmas season is upon us so this year we've put together a basic guide to help you understand what you need to know about ..."

Guidance on Christmas Parties and Gifts

Once again the Christmas season is upon us so this year we've put together a basic guide to help you understand what you need to know about tax and VAT when it comes to Christmas parties and giving gifts to customers and staff.

Staff Christmas Parties

HMRC allows up to £150 per employee for an annual party as long as all employees are entitled to attend. Be careful though, if the party exceeds the £150 per person threshold then the full amount of the benefit will be chargeable.

The cost of the function includes VAT and the cost of transport and/or overnight accommodation if these are provided to enable employees to attend. Divide the total cost of each function by the total number of people (including non-employees) who attend in order to arrive at the cost per head.

• If non-employees attend the party, i.e. partners or spouses, expenditure is allowable for tax. This is providing the total expenditure for the party, including the non-employee guests, amounts to £150 or less per attendee.

• If you are a small, owner-managed business then you are still able to claim up to £150 per employee for any Christmas party or meal, even if just two or three members of staff attend.

•  Where VAT is concerned, the expenditure on non-employees is viewed as entertainment which means the VAT on that proportion of the expenditure cannot be claimed back, so you will need to show the split between employees and their non-employee guests.

Social functions and annual parties

Seasonal Gifts

All gifts to staff including Christmas gifts are classed as taxable benefits, except where they deemed to be trivial gifts.

• An employer may provide employees with a seasonal gift, such as a turkey, an ordinary bottle of wine or a box of chocolates at Christmas. All of these gifts are considered to be trivial and as such are not taxable.

•  Monetary gifts, for example bonuses, are accounted for through the payroll system and taxed in the usual way.

•  Any non-monetary, non-trivial gifts must be included on form P11D.

 

Particular benefits: Trivial Benefits 

Christmas Gifts to Clients

Normally gifts for customers and clients are treated in the same manner as entertainment but gifts (up to £50) carrying conspicuous advertisement can be an allowable expense.

However as with Christmas parties you need to be careful as if the gift costs more than £50 including gift wrap the whole amount will be disallowed.

Common examples of allowable gifts are diaries, pens and mouse mats. The advertisement should be on the gift itself, and not just on the wrapping.

Have an enjoyable Christmas!

Tax Saving Advice: Salford Advertiser Christie Appeal Fundraiser

Tax Saving Advice: Salford Advertiser Christie Appeal Fundraiser: "Salford Advertiser Christie Appeal/TaxAssist Accountants Anniversary Fundraiser – Thursday 9th December We are holding our 1st anniversary c..."

Salford Advertiser Christie Appeal Fundraiser

Salford Advertiser Christie Appeal/TaxAssist Accountants Anniversary Fundraiser – Thursday 9^th December

We are holding our 1^st anniversary celebration and fundraising event in support of The Salford Advertiser Christie Appeal at our office at 6 Memorial Road on Thursday 9^th December 2010 between 5pm and 7pm.

We will be serving refreshments including homemade mince pies and cakes, and mulled wine in return for donations to the appeal.  There will also be a raffle with prizes already donated including:

·         2 tickets for a Manchester United Premier League home game

·         2 ball for golf at the Worsley Marriott

·         Several bottles of wine

·         Boxes of chocolates

Further donations of either raffle prizes or homemade cakes are welcome.

If you are able to come along for an ideal opportunity to start the Christmas season please call or email to let us know.

Tax Saving Advice: Get ready for when an inspector calls

Tax Saving Advice: Get ready for when an inspector calls: "Get ready for when an inspector calls, small businesses across Manchester are urged Small businesses across Manchester are being warned to ..."

Get ready for when an inspector calls

Get ready for when an inspector calls, small businesses across Manchester are urged

Small businesses across Manchester are being warned to prepare for a call from the tax inspector, as a national “grab for cash” targets business owners.

Chris Jones who runs small business tax and accountancy firm, TaxAssist Accountants, in Worsley said that HM Revenue and Customs (HMRC) were expected to massively increase the number of tax investigations they make, in a bid to reduce the tax gap – the difference between tax raised and what is thought to be owed – by £4 billion at the end of this financial year.  He comments:

“Cash businesses across Manchester such as private taxi firms, pubs, corner shops and takeaways, are particularly vulnerable and should ensure they have all their books in order and answers ready.  The investigation insurance company, CCH, has already seen an explosion in new cases, with new claims up 82%* compared to the previous year and this is expected to ramp up even more in the next few months.

“Business owners should not take this attack on their legitimate earnings and hard work lying down. If they ensure they have all the right procedures, records and proof of income and expenditure in place, they can show the tax inspector the door. They should also ask their accountant for fee protection insurance to cover the costs which could be run up in fighting any claims from HMRC.”

Chris Jones said small businesses in Manchester should follow five golden rules when the tax inspector calls:

• Challenge any part of the tax assessment you know is wrong
• Answer all correspondence from HMRC within their deadline – or fully explain why if you need more time
• Anticipate the inspector’s questions – if there is anything to declare do so early
• Ensure your tax advisor is experienced in negotiating with HMRC
• Appeal against any HMRC order to the independent commissioners within 30 days and go to the Tax Tribunal if you have a particular grievance

Businesses under investigation can see any documents held on them by calling the HMRC Data Protection Unit on 0191 225 7575, said Chris.

TaxAssist Accountants in Worsley is a local business itself, operating across Salford and West Manchester,  providing tax and accountancy advice and services to more than 90 small businesses.

Tax Saving Advice: How To Reduce Your Tax Bill: Buy a 'Green' Car

Tax Saving Advice: How To Reduce Your Tax Bill: Buy a 'Green' Car: "Currently you can claim a 100% allowance against tax of the purchase cost of a new ‘green’ car purchased by your business.What is a ‘green‘ ..."

How To Reduce Your Tax Bill: Buy a 'Green' Car

Currently you can claim a 100% allowance against tax of the purchase cost of a new ‘green’ car purchased by your business.

What is a ‘green‘ car?

So what qualifies as a ‘green’ car?

Well, it’s any vehicle which has CO2 emissions lower than 111 g/km.

Examples of such vehicles are diesel powered Mini’s or Smart cars and obviously the Toyota Prius.  For more examples of ‘green’ cars go to www.green-car-guide.com.

Are there any restrictions?

If you purchase the vehicle through a sole trader business or partnership and there is private use of the vehicle then the allowance is restricted to the percentage of business use only.

If purchased through a limited company there is no restriction but a taxable benefit will arise. This means there will be a national insurance charge to the business of 12.8% on the amount of the taxable benefit and a tax charge on the individual using the vehicle.

The good news is that the taxable benefit on a vehicle with CO2 emissions lower than 120 g/km is only 10% of the list price.

Other cars                        

If you purchase a car which is not ‘green’, allowances are still available as follows:

For vehicles with CO2 emissions between 111 g/km and 160 g/km the allowance is 20% of the cost on a reducing balance basis.  An example of a car in this band is a petrol powered Vauxhall Astra 1.6.

For vehicles with CO2 emissions over 160 g/km the allowance is 10% of the cost on a reducing balance basis.  An example of a car in this band is a petrol powered Audi A3 1.6.

The restrictions outlined earlier also apply to cars in this category therefore in many cases it will not be worthwhile purchasing such a car through a limited company.

The Government is reducing these allowances

It is important to note there is a time restriction on these allowances.  The 100% allowance is due to end in March 2013 and the 20% and 10% allowances will be reduced to 18% and 8% respectively from April 2012.

Leased vehicles

If you lease a vehicle the full rental charges can be claimed as a taxable deduction unless the retail price of the vehicle is over £12,000 and the CO2 emissions are higher than 160 g/km.  If this is the case there is a 15% restriction on the amount which may be claimed.

Should I buy a ‘green’ car?

It is certainly worthwhile purchasing a ‘green’ car because substantial tax savings can be made as well as helping the environment.  There are also other costs savings, for example no Vehicle Excise Duty to pay and cheaper running costs. 

However, it is always worth consulting a qualified and competent accountant or tax adviser before committing to any purchase.