November is here already, so it’s time to think about whether you’ll be buying gifts for your customers and employees. We look at the key legislation involved and offer some ideas about what to buy.

In the news, the government has launched a new plan to help small businesses get tax relief on research and development and there’s a look ahead at what we might see in the Autumn Statement.

Top news stories

Government launches research and development plan to boost small businesses

The new plan will make it easier for small businesses investing in research and development to claim tax relief.

Autumn Statement 2015: rumours, predictions and leaks

What could be in store on November 25th?

Manufacturers says skills shortages hold back exporting plans

Small businesses in the UK are missing out on global opportunities because they cannot recruit the right staff.

High-growth small businesses are creating 4,500 job a week

These employers make up just 1% of the total but created 34% of the new jobs in 2014.

Be ready for the end of the Annual Investment Allowance

Small businesses owners are being urged to be cautious as a possible £300,000 worth of business tax relief comes to an end this December.

Key dates for your diary

2 November: Police Act 1997 (Criminal Records) (Amendment No.2) Regulations (Northern Ireland) 2015 come into force. This changes the time period during which a registered body can ask for confirmation of the issuing of a criminal record or enhanced criminal record certificate. More details on the government’s website.

Ho ho ho: how to prepare for your Christmas gift giving

Giving gifts is an excellent way to thank your customers and employees for their support throughout the year. However, there are some rules that you need to be aware of so everyone has a merry Christmas. We’ll give you a summary of the legislation and offer some gift ideas for the season.

Understanding legislation

While we don’t want to be a Scrooge, it’s important that you know the key legislation that affects Christmas gifts, so you can make the necessary arrangements. Here are the key ones to consider:

Presents for employees

If you want to raise the seasonal cheer and say thank you to your employees, gifts are a great idea. There are a couple of ways you might be thinking about doing this:

1. Christmas gifts: Make sure the gifts are not excessive - for example, a turkey, a bottle of wine or a box of chocolates - as these can be treated as “trivial benefits”. This means they don’t have to be included in the P11D and aren’t taxable. At the moment there are no details about the maximum costs but from 2016, new legislation makes this clearer - employers will be able to give employees tax-free "benefits" (not cash) of up to £50 a year.
2. Christmas entertainment: You might decide that you’d like to provide a staff party or Christmas meal instead of or as well as any gifts. Try to keep the cost to £150 per head or less (including transport, accommodation and VAT), otherwise the party would be taxable as a benefit in kind.

Presents for customers

You might also want to thank your customers for their business throughout the year. However, do be aware of the legislation affecting this area. The Bribery Act 2010 came into force in July 2011 and contains legislation which relates to business gifts. However, the legislation is clear that:

“the Government does not intend that genuine hospitality or similar business expenditure that is reasonable and proportionate be caught by the Act, so you can continue to provide bona fide hospitality, promotional or other business expenditure.”

You just need to ensure you have taken the appropriate steps to guarantee that the gift is not given as a way of bribing someone for future business or other benefits. You should have a policy in place in your business and your employees should be aware of it. More detail about how to protect yourself can be found in this guide.

Business gifts and your accounts

There are a few things to be aware of from an accounting perspective:

• Business gifts are not allowed as a deduction against profits, and should be treated the same as business entertaining expenditure. More details can be found on the HMRC website.
• Small promotional gifts are tax deductible if they cost less than £50 each and carry a clear advert for your company.
• Employee entertaining, unlike client entertaining, is allowed to be deducted from corporation tax. However, if customers attend the Christmas party, you’ll need to think about how to apportion the costs.
• There’s no VAT on purchased gift vouchers as they are treated as cash equivalents. However, because they count as cash, they wouldn’t be treated as “trivial benefits” (see above) and the employee would need to pay tax on the full value of the voucher.
• If suppliers or customers give you gifts worth more than £250, then you would need to be taxed on them. You also need to ensure that you’re following the Bribery Act legislation discussed above.

Gift ideas for businesses

With legislation taken care of, it’s time to think about what to buy. If you’re stuck for ideas, research by American Express may help. It shows the top Christmas gifts given by businesses: