Here are some of our best tips to help you lighten the expensive Christmas load…

Tax Tip 1 On the first day of Christmas my accountant said to me…
put on your dancing shoes. You can claim a tax deduction of up to £150 per head for your staff Christmas party. But remember to get into the kind Christmas spirit – all employees must be invited for the event to qualify for the exemption! In order to work out the cost per head you need to add together the VAT inclusive cost of the event together with any costs of transport and accommodation. You then divide this by the number of people attending. But bear in mind – the £150 is per head, per year, so it’s not just restricted to Christmas. How about a staff summer BBQ too? (Remember to invite us!)

Tax Tip 2 On the second day of Christmas my accountant said to me…give gifts to employees. Christmas is a time for giving. You can give an employee a gift at Christmas, or on a special occasion such as marriage or a birthday and there will be no taxable employment benefit providing the gift is trivial. The sorts of gifts that are treated as “trivial” by HM Revenue & Customs (HMRC) are: • A box of chocolates • A bottle of ordinary wine • A turkey • Flowers …And if you’re feeling especially generous this concession also applies to seasonal flu jabs.

Tax Tip 3 On the third day of Christmas my accountant said to me…
Check out the VAT Flat Rate Scheme. If you are VAT registered, you can save lots of money by being on the Flat Rate Scheme (FRS). The FRS scheme means instead of paying the difference between 20% on sales and 20% on purchases, you just pay a flat rate percentage on your total gross sales (determined by your industry). Not only can you save money, but it means you can produce your VAT return in 5 minutes! Click here for more information. Tax Tip 4 On the fourth day of Christmas my accountant said to me…
Incorporate! The tax rates being what they are now, no matter how much you’re earning, it’s always more tax efficient being a limited company (as opposed to Sole Trader/Partnership). You can save lots of tax by paying yourself with a mixture of dividends and a salary. Here’s how it works: as an individual, you have a tax free allowance of £8,105 per year, which if you don’t use, you lose. A salary of this amount is a good way to use this allowance. The rest of your income will probably be taken as dividends. This is because dividends have a lower rate of tax of just 10% (compared to 20% for a salary/sole trader income). And voila! A large tax saving for you.

Tax Tip 5 On the fifth day of Christmas my accountant said to me…
Make it a family affair. Are you stuck for a Christmas present for a family member? Do they help out in your business? Why not make them a part of your company and use up their tax-free allowance that may otherwise be wasted (if they earn less than the single person’s allowance of £8,105 per year). A wage of between £107 and £144 per week will not create a national insurance charge, but it will help your spouse gain credits towards their state pension.

Tax Tip 6 On the 6th day of Christmas my accountant said to me… Be a sneaky Santa. Do you give gifts to your clients at Christmas? Use this as an advertising opportunity and make a tax deduction! Remember that you cannot claim a deduction for the cost if the gifts to clients are food, drink, tobacco or gift tokens. To be allowable as a business expense, the gift must also carry a “prominent” advertisement for your business, and there is a limit on the cost of £50 per client. So forget the whiskey and cigars – put things like diaries, calendars and mouse mats in your Santa gift sack you want a tax deduction.

Tax Tip 7 On the 7th day of Christmas my accountant said to me… Ditch the sleigh and get a van! Do not have a company car. They are a rip off and you’ll pay loads in tax. Instead, get a van or a pick up. Van’s and pick up’s (which are classed as vans) are 100% tax deductible.

Tax Tip 8 On the 8th day of Christmas my accountant said to me… Start a petrol patrol. Are you claiming the cost of fuel in the best way? It’s usually better to claim 45p per mile rather than the actual cost. You could save thousands of pounds a year just with this. Why not use our free mileage log to help you save.

Tax Tip 9 On the ninth day of Christmas my accountant said to me…
Claim your household costs. If you work from home, you can claim a reasonable proportion of your household bills through your business (gas, electricity, Internet etc). It’s the small things that count you know…

Tax Tip 10 On the 10Th day of Christmas my accountant said to me… Get organised. In need of a new years resolution? Make sure you keep complete and accurate business records. Good records can reduce the risk of paying extra tax and penalties if you are subject to a tax inquiry.

Tax Tip 11 On the 11th day of Christmas my accountant said to me… Sharing is caring. Consider setting up an approved share scheme to allow your employees to buy shares in your company at a favourable price, which will encourage them to be more involved in the business. The employees can also benefit from low tax rates when they sell the shares. A win-win situation, don’t you think?

Tax Tip 12 On the 12th day of Christmas my accountant said to me… Get a Christmas present for yourself. …and get a really good accountant (us). The best thing you can do to save tax is get a good accountant. We could save you more in tax than we charge, so we pay for ourselves – what are you waiting for?!