Christmas Client Gifts and Cards: What You Can and Cannot Claim

Christmas is a natural time to show appreciation to your clients. A card, a small gift, maybe a meal out. It feels like the right thing to do, and in most cases it is. But before you start ordering personalised hampers and booking restaurant tables, it is worth understanding what you can and cannot claim back, because the rules are not always obvious.

I sat down with a local accountant to get clarity on the three most common scenarios small business owners face at this time of year. Here is what you need to know.

Christmas cards

Good news. Christmas cards can generally be treated as a stationery or marketing expense, which makes the cost allowable for tax purposes. There is one condition though: your business name or logo must appear on the card. A generic card with no branding does not qualify.

So if you want to claim the expense, make sure your cards are branded. It is a simple step that makes a real difference to whether the cost is allowable or not.

Gifts for clients and potential clients

This is where it gets a little more complicated.

You can claim tax relief on gifts to clients, but only if all three of the following conditions are met:

• The gift carries a conspicuous advert for your business
• It is not food, drink, tobacco or a voucher exchangeable for goods
• The total cost is under £50 per person, per tax year (including any other gifts you have sent that individual during the year)

This is exactly why branded pens, diaries and calendars are so popular at Christmas. They tick all three boxes.

If you would like to send something more personal, such as wine or chocolates, you can still do it. You just need to record it as business entertaining rather than a gift, and you will not be able to claim the VAT or the cost back. It is not a reason to skip the gesture entirely. It just needs to sit in the right place in your accounts.

A useful way to think about it: a bottle of wine is entertaining. A branded bottle opener is a gift. Small distinction, different tax treatment.

Taking clients out for a meal or drinks

Treating your clients to a Christmas meal or a round of drinks is a generous thing to do and most clients genuinely appreciate it. However, client entertaining is not tax-deductible. You can record the expense in your accounts, but it will be added back to your profit before any tax is calculated, so you will not get relief on it.

That does not mean it is not worth doing. It just means going in with your eyes open about the cost.

A word of caution

The guidance above is a general overview, not personalised tax advice. Rules can change, and your individual circumstances may affect what applies to you. Always speak to your accountant before making decisions, particularly if you are unsure where a specific expense sits.