Can I give a gift to a client?

Can you give a gift to a client and claim the tax back on it?

THESE RULES APPLY TO ALL BUSINESS TYPES:

• Gifts of food, wine and tobacco are not tax-deductible (even if they carry your logo). You can put the expense through the business, but it will not reduce your taxable profits, and you cannot claim any VAT
• Gifts exceeding a £50 value are disallowable IN FULL (ie you can’t claim £50 and then just disallow the amount exceeding £50)
• Branded gifts under £50 are allowed for tax purposes (once per year). If you provide a package of gifts (eg a stationery pack), the total value must be under £50. As these are branded items, they can be classed as advertising and marketing, and thus you can claim the VAT back on the cost of the gifts if you are VAT Registered. (think umbrellas, diaries, pens)
• Unbranded gifts to clients can be put through the business but are classed as client entertaining and therefore no tax claimed back
• Providing free products as samples to your clients/audience is deemed to be an advertising/marketing cost and is therefore allowable as an expense for both VAT and tax
• Offering a free gift when someone purchases a certain level of goods/services is allowable, and is in fact seen as part of the purchase price – it does however have to be stated before buying, eg “when you spend £25 on our site today you will receive this free gift” 

So, if you want to give a client a Christmas present, and make sure it is tax deductible, you either need to ensure it is fully branded and under £50, or instead you may wish to donate to charity (which is also fully deductible!). You may also consider running a Christmas offer where a service or product is purchased, they receive a free gift with it.