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What Businesses in the UK Need To Know About Preparing For Christmas

Christmas is a busy time of the year, and particularly so for business owners. This article covers a few important considerations that will help you plan ahead and make this time of the year less stressful and much more enjoyable -just as it should be.

Christmas 2016: Important dates to keep in mind
This year, Christmas Day falls on a Sunday, with the 27th substituting as a Bank holiday. New Years Day falls on a Sunday, with Monday the 2nd of January substituting as the bank holiday.

Other important dates to keep in mind are the Post Office’s recommended last posting dates. Letters and / or packages sent via 1st class mail within the UK should be posted by Wednesday the 21st of December if they are to arrive before Christmas Day. Items send via 2nd class mail should be posted by Tuesday the 20th December. The last posting dates for international mail or packages vary depending on the country of destination. Bear in mind that some destinations have a last posting date as early as 4th December.

Lastly, if you run an online businesses it is important that you add to your website clear and easy-to-find information on any special terms and conditions that may apply to ordering and shipping during the Christmas period. The same applies to your business telephone answering system, as it is recommended that you keep clients informed by adding a recorded message to your business voicemail or to your on-hold messaging system with your company’s opening and closing dates.

Tax information for UK businesses

Tax matters are probably the last thing you want to be worrying about during the countdown to Christmas. However, it is wise to be aware of the implications that some Christmas activities can have on your corporate taxes. This is not only important for better compliance with legal regulations, but also to ensure that your business will not have cash flow issues during the Christmas season. Having an adequate cash flow is especially important at this time of the year, given that the vast majority of businesses incur extra expenses during the festive season, whether they are related to taking on extra staff, corporate gifts, Christmas decorations and staff parties, or ordering additional stock.

The main thing to bear in mind when it comes to taxation during the festive season is that tax relief is available on several Christmas-related expenses. Here’s an overview of the key HMRC guidelines every business owner should be aware of:

  • Staff office parties: Generally speaking, business owners who organise a Christmas party or a similar event for their staff are not required to report it or pay additional NICs, as long as a) the cost per person doesn’t exceed £150 b) the function is open to all employees, and c) the event is held on an annual basis.If the criteria listed above are not met, you would only need to report the expenses involved for every member of staff who attends the function and who earns £8,500 or more / year. In this case, expenses will have to be reported using form P11D and Class 1A NICs apply.
  • Christmas parties for clients & corporate events: These fall under the category of business entertaining, and as such, no tax relief or VAT can be claimed on events of this type.
  • Christmas gifts for clients: For the most part, any Christmas gifts given to clients are considered part of business entertaining, meaning that no VAT or tax deductions can be claimed on them. However, you may claim tax relief on gifts if a) they aren’t good, beverages, or tobacco b) they aren’t tobacco c) they aren’t vouchers that can be exchanged for any of the above d) they contain your company’s logo or some form of advertising, and e) if the total cost of gifts given to a particular client over the course of a year does not exceed £50.
  • Christmas gifts for staff: Whenever gifts given to staff lack monetary value, they are considered benefits for tax purposes and as such, they do not need to be reported and no additional NICs have to be paid on them. This would be the case of bottles of wine, chocolates, or Christmas hampers, to name just a few common examples. Gifts that have monetary value (for example store vouchers) must be reported using form P11D.With regards to Christmas bonuses, they are subject to the same tax regulations as wages and are therefore subject to PAYE and NICs.





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