Unwrapping Christmas tax gifts

Christmas is a time for giving, but many businesses may not be aware that their gifts can be made in a tax-efficient manner, which could make raising festive spirits that little bit cheaper.

While Christmas parties may not be for everyone, HM Revenue & Customs (HMRC) does provide an allowable tax deduction of up to £150 per head per year for events.

This means companies could hold one big Christmas blow out or spread their allowance over the year to improve staff engagement.

Of course, there are restrictions to this allowance. Under the rules, you must invite all employees to the event for it to qualify for the exemption and the cost per head must include VAT and take into consideration the cost of the entire event, including food, drinks and a venue.

If you are feeling generous this year, you could also give gifts to your employees at Christmas or any other special occasions. Thanks to the relief on offer, there will be no taxable employment benefit, providing the gift is trivial, such as a box of chocolates or a bottle of bubbly. However, the costs must not exceed £50 and must not be in the form of cash or a cash voucher.

Finally, you can spread the Christmas cheer even further by providing gifts to your clients. As long as the gift is less than £50 and includes a “prominent” advertisement for your business, then you can receive a tax deduction.

Gifts of food, drink, tobacco or vouchers are unfortunately not allowable, but items such as stationary would fall within the rules.

House of Lords calls for a delay to Making Tax Digital

The House of Lords Economic Affairs Committee has criticised HM Revenue & Customs (HMRC) for its handling of Making Tax Digital (MTD) and called for a delay to some of the regime’s mandatory requirements.

The majority of VAT-registered businesses with taxable turnover above the VAT registration threshold of £85,000 will need to keep digital records and file their VAT returns using HMRC-compliant software or methods on a quarterly basis from April 2019.

However, having reviewed the requirements for MTD and its promotion by HMRC to businesses, the committee has recommended that the new rules for VAT should not be made mandatory next year and should instead allow businesses to ‘go digital’ at their own pace.

The Lords also recommended that the Government wait until April 2022 to apply MTD to other taxes to give HMRC time to learn lessons from the implementation of digital taxation on VAT.

Within its report, Making Tax Digital for VAT: Treating Small Businesses Fairly, the committee was also highly critical of HMRC’s public promotion of the new regime, which only began in any significant way several months ago.

Lord Forsyth of Drumlean, Chairman of the House of Lords’ Economic Affairs Committee that authored the report, said: “HMRC has neglected its responsibility to support small businesses with MTD for VAT.

“Small businesses will not be ready for this significant change to their practices, especially with Brexit taking place three days earlier,” he added.

The committee’s report has already gained the backing of a number of leading accountancy organisations, including the Institute of Chartered Accountants in England and Wales (ICAEW), the Chartered Institute of Taxation (CIOT) and the Association of Tax Technicians (ATT).

Link: Making Tax Digital for VAT: Treating Small Businesses Fairly

180,500 first-time buyers benefit from relief on Stamp Duty Land Tax (SDLT)

Figures released by HM Revenue & Customs (HMRC) have revealed that 180,500 first-time buyers have benefited from the Government’s changes to Stamp Duty Land Tax (SDLT).

HMRC estimates that first-time buyers have saved a total of more than £426 million since Chancellor Philip Hammond announced the First-Time Buyers’ Relief (FTBR) in November 2017.

At Budget 2018, the Chancellor announced an extension of the scheme to first-time buyers purchasing through approved shared ownership schemes that choose to pay SDLT in stages, rather than on the market value of the property. This relief is available retrospectively to eligible property transactions since November 2017.

Mel Stride MP, Financial Secretary to the Treasury, said: “These statistics show that the Government was right to offer a helping hand to first-time buyers. Without this investment, more than 180,500 new homeowners may have struggled in getting onto the property ladder. Maintaining the status quo was not an option.”

FTBR is becoming increasingly popular, with the relief claimed in 58,800 transactions between July and September 2018, representing a 12 per cent increase on the previous quarter.

Link: 180,500 new homeowners benefit from stamp duty tax relief