Can You Buy Christmas Gifts Through Your Business?

As the festive season approaches, many business owners want to show appreciation to their clients, staff, and suppliers. A thoughtful Christmas gift can go a long way in strengthening relationships, boosting morale, and spreading a bit of cheer.

But here’s the question every business owner asks around this time of year: can you buy Christmas gifts through your business and claim them as a tax-deductible expense?

Let’s look at what HMRC allows and how to stay on the right side of the rules.

Gifts for Employees

Giving your team a small Christmas treat is a great way to thank them for their hard work, but there are some conditions if you want to make it tax-free.

Under HMRC’s Trivial Benefits rule, you can provide small gifts to employees without paying tax or National Insurance, as long as they meet the following criteria:

✅ The gift costs £50 or less (including VAT)
✅ It isn’t cash or a cash voucher
✅ It isn’t a reward for work or performance
✅ It isn’t part of the employee’s contract

If your gift ticks all four boxes, it qualifies as a trivial benefit and is completely tax-free.

Examples of Trivial Benefits

• A Christmas hamper worth £45

• A bottle of wine or a box of chocolates

• A festive meal or gift card (as long as it’s not exchangeable for cash)

If you’re a company director, there’s an annual cap of £300 per tax year on trivial benefits. You can spread this across several small gifts if you wish, as long as each individual gift remains under £50.

Gifts for Clients or Suppliers

This is where things get trickier.

HMRC has strict rules about claiming tax relief on business gifts to clients, customers, or suppliers. Generally, client entertainment and gifts are not tax-deductible unless they meet specific conditions.

You can claim tax relief on gifts if:

✅ The total cost per person per year is less than £50
✅ The gift includes a visible business logo or branding
✅ It isn’t food, drink, or tobacco
✅ It isn’t a voucher or something exchangeable for cash

Example

A branded notebook, mug, or calendar with your company logo would qualify as a deductible business gift.

However, a bottle of wine or a Christmas hamper for a client would not qualify for tax relief. It’s still a kind gesture, but it will need to be paid for from post-tax profits.

Gifts for Charity

If your business donates to charity over Christmas, this is treated differently.

For limited companies, charitable donations to registered charities are generally tax-deductible, as long as they are not in return for advertising or promotional benefits that exceed HMRC limits.

For sole traders and partnerships, charitable donations are not deductible against business profits, but you may still claim personal tax relief under Gift Aid.

It’s a great way to give back while also supporting your community during the festive season.

VAT on Christmas Gifts

If your business is VAT registered, you can usually reclaim VAT on gifts, provided they cost less than £50 per person per year.

If the total value of gifts to one person exceeds £50 in a 12-month period, you’ll need to account for output VAT on those items, as HMRC treats them as a benefit in kind.

This applies to both staff and non-employees, so keep an eye on the total cost per recipient.

The Bottom Line

Buying Christmas gifts through your business is absolutely fine, but whether you can claim them as a tax-deductible expense depends on who the gift is for and how much it costs.

• Gifts to staff can be tax-free if they qualify as trivial benefits

• Branded gifts to clients may be allowable if they meet HMRC rules

• Charitable donations are deductible for limited companies

• VAT can often be reclaimed, but only within the £50 annual limit

If you’re unsure whether a particular gift qualifies, check with your accountant before purchasing. That small step could save you unnecessary tax later.

At Rhombus Accounting, we help business owners make smart, compliant financial decisions throughout the year, so you can be generous at Christmas without worrying about the tax consequences.

Meet Lewis

Lewis is a professional accountant and founder of Rhombus Accounting. He regularly shares his knowledge and best advice here on his blog and on other channels such as LinkedIn.

Book a call today to learn more about what Lewis and Rhombus Accounting can do for you.