Start Planning your Christmas spending now

Holiday spending can feel a little murky when you’re running a business, particularly when it comes to gifts, bonuses and entertainment. What’s deductible? What attracts FBT? And what counts as income? Here’s how some of the most common festive expenses are treated.

Client gifts

Food and drink (think wine, chocolates or a Christmas hamper) are generally 50% deductible, while other gifts, such as flowers or branded merchandise, may be fully deductible. If you opt for a gift card or voucher, the tax treatment still depends on what it can be used for.

Bonuses and staff gifts

Cash bonuses come with PAYE obligations, whereas with gift cards and vouchers you can choose to treat them under the FBT rules or as income subject to PAYE. If you choose the FBT option and stay within Inland Revenue’s limits, you may not have any tax to pay.

The Christmas party

It can bring your staff a lot of cheer; just remember the Christmas party is entertainment, and entertainment costs are only 50% deductible. So whether you celebrate onsite, head out to a venue, or do something unique, keep the budget realistic.

Don’t get tangled in the tinsel! Run your plans past us now, before the silly season is in full swing.